Registered number: 1420028
BBC Worldwide Limited
Annual Report and Financial Statements
for the year ended 31 March 2016
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Contents
Business Review
Highlights of the year
Chairman’s statement
What we do
1
2
3
Strategic Report
Chief Executive’s review
A global content partner
Chief Financial Officer’s review
United Kingdom
North America
Australia and New Zealand
Global Markets
4
6
7
10
11
12
13
How We Work
BBC Worldwide Executive Committee
Corporate governance report
Risk management
Directors’ Report
Report on Directors’ remuneration
14
15
16
18
20
Financial Statements
Statement of Directors’ responsibilities
Independent auditor’s report
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated cash flow statement
Consolidated statement of changes in equity
Notes to the consolidated financial statements
Company statement of comprehensive income
Company balance sheet
Company statement of changes in equity
Notes to the company financial statements
25
26
27
27
28
29
30
31
76
77
78
79
1
2
3
17
18
83
28
29
30
30
31
32
33
34
72
73
*
Throughout this Review, headline sales refers to gross revenue including the Group’s share of revenues from joint ventures. Headline profit refers to operating profit
before specific items and includes the Group’s share of operating profits from joint ventures and associates. Specific items are set out on page 8. A reconciliation between
headline profit and profit before tax is presented in the Chief Financial Officer’s review on page 8.
Underlying growth is based on the comparison of 2015/16 results to 2014/15 results on a like-for-like basis, i.e. after adjusting for the impact of derecognising BBC AMERICA
results. This differs from the separately disclosed seven months of headline sales and profit recorded in 2014/15 due to the subsequent share of BBC AMERICA profit recorded
in both years and the impact of intragroup eliminations as content sales to BBC AMERICA are no longer being eliminated as an internal sale. BBC AMERICA was consolidated in
the Group’s results up to 23 October 2014. Thereafter, and throughout 2015/16, the Group recognised its share of the net profits of BBC AMERICA within continuing operations
in the income statement.
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Our business delivered solid growth in 2015/16. Headline sales were up 2.8%, or 6.7% on an underlying basis.
Our performance enabled us to provide valuable returns well above £200m to the BBC, for a second
consecutive year.
Highlights of the year
RETURNS TO THE BBC
HEADLINE SALES
HEADLINE PROFIT
£222.2M
£1,029.4M
£133.8M
(2014/15: £226.5M) -1.9%
(2014/15: £1,001.8M) +2.8%
(2014/15: £138.6M) -3.5%
+17.6% INCREASE ON PRIOR YEAR
+6.7% UNDERLYING GROWTH IN
+4.0% UNDERLYING GROWTH IN
RETURNS ADJUSTED FOR DISPOSALS
PROCEEDS
HEADLINE SALES
HEADLINE PROFITS
Supporting the BBC to make world-class programmes
Our primary measure of financial success is returns to the BBC. At £222.2m, returns for 2015/16 were almost
in line with the previous year, and were up 17.6% adjusted for disposals, a record. Over the past five years,
returns have totalled almost £1bn – money that has supplemented the licence fee to keep audiences in the UK
informed, educated and entertained.
HEADLINE SALES
HEADLINE PROFIT
United Kingdom
United Kingdom
£379.3m
£62.4m
(2014/15: £361.8m)
(2014/15: £52.7m)
North America
North America
£277.9m
£24.2m
(2014/15: £299.9m)
(2014/15: £32.9m)
Australia and New Zealand
Australia and New Zealand
£79.1m
£19.2m
(2014/15: £81.9m)
(2014/15: £16.3m)
Global Markets
Global Markets
£305.7m
£26.4m
(2014/15: £276.3m)
(2014/15: £32.2m)
Five-year returns to the BBC £m
£994.2m
2015/16
RETURNS TO THE BBC OVER PREVIOUS FIVE YEARS
2013/14
(2014/15: £953.9m) +4.1%
2012/13
222.2
226.5
2014/15
2011/12
1
173.8
156.0
215.7
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Chairman’s statement
BBC Worldwide’s reported return for 2015/16 was £222.2m, a very strong performance. This result meant BBC Worldwide contributed
the equivalent of £8.55 for every licence fee payer, or 13.0% of the BBC’s spend on television content. The two largest elements of this
return were investment in BBC commissions and dividends, at £92.7m (2014/15: £94.4m) and £105.5m (2014/15: £111.3m)
respectively.
This financial return to the Corporation allows the BBC to commission with a level of ambition and production values that would simply
not be possible within the licence fee alone. Prime examples of this during the year included The Hunt, narrated by Sir David
Attenborough, from Silverback Films, and BBC Production’s War and Peace, written by Andrew Davies. Almost three-quarters of The
Hunt, watched by large audiences in the UK, was commercially funded via BBC Worldwide, including co-production deals with BBC
AMERICA, China’s CCTV-9 and Germany’s NDR. For War and Peace, BBC Worldwide worked alongside partner Lookout Point to
broker a major co-production partnership with The Weinstein Company. A significant success with audiences and critics alike, War and
Peace has since been sold to 184 territories, including Russia.
These programme successes demonstrate the synergy between the public service BBC and BBC Worldwide. The BBC has been
involved in commercial activity from the establishment of Radio Times in 1923 and while this activity has evolved over the intervening
decades, it remains both essential and highly complementary to the success of the Corporation.
However, the benefits of BBC Worldwide are not limited to the BBC. BBC Worldwide is a unique content partner and facilitator: active
throughout the creative process from initial idea to eventual export, using both the BBC brand and distinctive British content to light the
way for UK programmes in international markets. This is one of several ways in which we fulfil our public purpose of ‘bringing the UK to
the world’. This halo effect helps both the BBC and the independent sector, as well as the writers, directors, actors and producers
whose work is, in part, funded by overseas and secondary market demand for quality British content.
By helping put British television onto a global stage, BBC Worldwide contributes to the reputation of Britain as one of the world’s most
brilliantly creative countries. In this vein, it was fantastic to see Sherlock: The Abominable Bride receive global ‘big screen’ treatment in
January, with cinema screenings for fans in over 20 countries complementing the television broadcast, with 6000 screenings in Asia
alone.
BBC Worldwide’s vitality and health will be a critical ingredient in the BBC’s success over the course of the next Charter period. With a
lower financial settlement and increased responsibilities to fund, maximising our commercial revenue is imperative, not optional. The
Board of the BBC is looking to BBC Worldwide to provide £1.2bn of returns over the first five years of the next Charter. This represents
more than a 15% uplift on the previous five years, or almost 30% adjusted for dividends relating to disposals during that term.
Fortunately, given these demands and its importance, BBC Worldwide is in solid shape. Despite a challenging operating environment,
the BBC has high expectations for its future, which BBC Worldwide has the imagination and ambition to realise. With that in mind, I
would like to thank Tim Davie and the staff of BBC Worldwide, whether in Sydney, Los Angeles, Johannesburg, Singapore, London or
elsewhere, for their hard work and dedication during the year.
Tony Hall
Chairman, BBC Worldwide
and Director-General, BBC
2
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
What we do
1








WE PARTNER
Creative development
Funding for BBC and independent
productions
Facilitating international
co‑production deals
Investment in the UK production
sector
Nurturing talent
Supporting new writers
Building innovative partnerships
Secondary rights acquisition
2






WE COMMERCIALISE
Programme and format sales
Channel commissions
Formats and original
content production
BBC branded services
including websites
Ancillaries and other IP exploitation
Marketing and social media
3
WE DELIVER RETURNS
TO THE BBC





Programme investment
Dividends
Other rights payment
Growing the brand across the globe
Building the reach of BBC
programmes
TO RIGHTSHOLDERS



Royalties
Profit share
Showcasing UK creativity
Ethics
To ensure we fulfil our responsibilities as a leading corporate citizen, we are constantly looking at how to improve the way in which we
conduct business.
From an ethical trading perspective this includes working hand in hand with our licensing and supplier partners to ensure all
manufacturers they work with meet the requirements of our ethical sourcing programme, prior to production of our consumer products.
It is also vital that employees across BBC Worldwide understand the importance ethical sourcing plays within our business: this year
we introduced mandatory online training for all staff involved in the sourcing or licensing of our products.
We also furthered our involvement with multi-stakeholder initiatives including the Ethical Trading Initiative and SEDEX, the Supplier
Ethical Data Exchange, adding our voice to the wider debate around the challenges within this field.
Environment
In April 2015, we completed the integration of our two London offices to a new HQ in the iconic Television Centre. To minimise our
impact on the environment, our new HQ was refurbished to a SKA Gold standard and we have focused on ensuring the building is
operated in an environmentally friendly manner. This has included introducing measures such as separate waste streams for food and
ensuring fittings and equipment such as lights and printers automatically enter low energy settings outside of core business hours.
Environmental impacts have also been considered in other offices including Sydney and New York.
In the 2014/15 Annual Review we noted that we would begin implementing robust monitoring and improve data collection across our
global offices. This ongoing commitment will enable us to identify opportunities for improvement.
We also strengthened our working relationship with the other parts of the BBC, to ensure our environmental approaches are aligned.
3
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Chief Executive’s review
It has been another year of major change for the industry:
subscription video-on-demand (SVOD) companies are rapidly
expanding, content budgets are growing and only three of the
UK’s top 20 independents are domestically owned. Overnight
ratings are in decline, as time-shifting has become mainstream.
Yet consumption of premium long-form content has never been
higher, while on a global basis pay-TV remains resilient.
Strategic progress
We made considerable further progress on the strategy first
announced in October 2013. That strategy was to achieve three
things:

to increase focus on premium, world‑class content;

to grow global brands; and

to effect a gradual transformation to digital products and
services.
Results
All these dynamics are reflected in the year’s results. We are
pleased to show good growth at the top and bottom lines, with
underlying sales growth of 6.7%, well ahead of our industry’s
growth rate.
Headline
sales
were
£1,029.4m
(2014/15: £1,001.8m), up 2.8%, despite the inclusion of seven
months’ full ownership of the BBC AMERICA channel
in the previous
year.
Headline
profit
of
£133.8m
(2014/15: £138.6m) was diminished by the full year impact of
BBC AMERICA. Removing this effect shows headline profit
growth of 4.0%. Full details of our regional results are set out
in the individual markets’ operating reviews on pages 10-13 while
further analysis of our overall results can be found in the
Chief Financial Officer’s (CFO) review on pages 7-9.
Premium content
During the year we further strengthened both our content profile
and our supply base, as outlined on page 6. For a second year,
drama – a growth area for producers and broadcasters across the
world – made up around half our total investment: a deliberate
rebalancing, as well as the result of continuing increased costs in
the content market. We took delivery of new titles from Banished
to War and Peace, Doctor Foster, Dickensian and Thirteen,
having invested alongside BBC channels, as well as new
commissions from other British broadcasters including Maigret
and The Durrells. Our returning titles were also in strong
form, with Doctor Who in its ninth series, Death in Paradise and
Call the Midwife completing their fifth and Silent Witness now at
series 19. The strength and breadth of this slate was visible both
at trade markets, and in a sales performance that saw drama
make up 49% of all our programme licence revenue in the year.
As the Director-General points out on the previous pages, this
performance enabled us to return £222.2m (2014/15: £226.5m) to
the BBC. This keeps our return above the £200m mark for a
second year running, and is a 17.6% year-on-year improvement
adjusted for disposal proceeds. I know that everyone at BBC
Worldwide takes pride in the material contribution that our
activities make towards the BBC’s ability to fulfil its promise to UK
audiences.
Highlights in our second largest investment genre, natural history,
included Shark and Attenborough and the Giant Dinosaur,
alongside landmark The Hunt. Among our documentary deliveries
was BBC Worldwide commission Beckham: For the Love of the
Game, which secured 4.1m viewers on BBC One. In children’s
we were pleased to see two new high potential titles – Go Jetters
and Hey Duggee – rating very well both at home and
internationally, while BAFTA-winning Sarah & Duck was
produced for a third series.
Market shifts
All this has been achieved in a time of rapid change, which has
presented opportunities, as well as fundamental threats, to our
business. Historically, BBC Worldwide’s business model was
significantly reliant on DVD, with consumer products our second
largest profit segment until four years ago. Free to air and pay
broadcasters drove growth in content sales, while traditional
affiliate distribution underpinned channels. A shift to digital
distribution and consumption has affected all these areas and
necessitated a continuing transformation of the company. We
have absorbed a 38.5% decline in DVD revenue in just three
years, while supplementing our core sales customers with sales
to digital platforms. We have committed substantial investment
into our channels, re-branding the majority, while rationalising
some, and partnering on others. At the same time, we have
responded to supply-side changes – driven both by the digital
revolution and by producer consolidation – by taking action to
secure content through major international co-productions and
closer indie relationships. This momentum also underpins our
confidence in the decisions we are taking about our investments
and strategic direction.
We also continued our strategy of long-term partnerships with
high quality UK independent production companies. This allows
us to secure content rights, frequently for BBC commissions,
while supporting independents with access to our funding,
distribution and expertise. In our equity relationships, some of
which first date back a decade, BBC Worldwide is a long-term,
stable shareholder. We can provide the financial and creative
partnership that allows small and medium sized indies to expand,
while retaining both their Britishness and the independence
that keeps the UK production scene so dynamic. Our work with
independents returned some £116.1m (2014/15: £113.1m) to the
indie sector in the year. This is one of several ways in which BBC
Worldwide performs an important role as a core part of the UK’s
creative economy.
The year saw us upgrade our offer and performance in content
sales. We introduced a programme based around insight,
customer relation management and marketing at the end of the
previous year. Its implementation and initial success in 2015/16
helped us to an impressive 18.4% growth in revenue from content
sales, a key benchmark of our competitiveness. Digital sales
were particularly strong, reflecting new service launches from
both global and local SVOD operators, and we welcomed around
700 sales clients for a third year running at our main trade event,
BBC Worldwide Showcase. Building on global hits such as
Dancing with the Stars and The Great Bake Off, we also brought
renewed attention to format development, acquisition and sales,
resulting in more local versions of our hit British shows than ever
before and good growth in format sales.
4
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Chief Executive’s review (continued)
Global brands
Keeping our largest programme brands healthy and competitive
was also a focus in the year. ABC’s Dancing with the Stars, which
we produce in Los Angeles, performed very strongly in its 20th
and 21st series in the year. We also saw impressive international
performances from Doctor Who S9. Meanwhile, Top Gear
underwent an exciting re-casting, with established and new
presenting talent secured for series 23, which premiered in May.
with 176 fewer employees than 12 months previously, a reduction
equivalent to some 9% of our workforce. This resulted in in-year
savings of some £10.8m versus prior year, with an additional
£4.6m savings expected in the next financial year. This has
enabled us to invest to meet clients’ and audiences’ future needs,
while maintaining our financial performance in the face of very
real margin pressure. While this involved some difficult decisions,
I believe we can nonetheless keep the company competitive and
appropriately invested in to achieve growth goals for the longer
term.
We made rapid progress on plans to upgrade our linear channels,
resulting in a portfolio that looked quite different at year end from
12 months earlier. Having launched new scripted brand BBC First
in Australia the previous year, we began to roll out two further
genre brands: BBC Brit in factual entertainment and BBC Earth in
premium factual in the year. Major launch markets for our new
channel brands included Poland, the Nordics, South Africa and
Latin America. We ended the year with 12 of our 33 international
channel feeds carrying the new genre brands, making BBC Earth
and BBC First available in at least 40 countries and BBC Brit in
61. Audience and affiliate reaction has largely been positive, and
we will continue to re-brand most of our other channels in the
year ahead. Distribution and revenue for the BBC World News
channel, for which we provide an affiliate and advertising sales
service globally, along with AMCN in the USA, also increased in
the year.
Culture
I would like to thank BBC Worldwide’s employees for approaching
this exercise with such professionalism. Our overall company
engagement score of 70% remained well above the global market
norm of 55%. We made good progress on adopting a common
way of working and behaving in every one of our offices: a
‘commitment’ developed out of feedback from employees, and
designed to ensure everyone is able to contribute their very best
work here. Building on those insights, we also introduced a global
employee awards scheme to recognise exceptional effort and
achievement, as well as a new training curriculum. We now have
a network of over 40 Team Worldwide ‘Champions’ across our
global offices, running very active interest communities from arts
to sports, and planning a range of activities to benefit employees
and our local communities alike.
Before closing, I would briefly like to pay tribute to two CFOs for
their service during the year: Andrew Bott who, after more than a
decade with the company, and two years in this role, left in
January for a Group CFO role at FremantleMedia; and Suzanne
Burrows, who covered the role on an interim basis over the busy
year-end period until May, when we were joined by permanent
CFO Tom Fussell. Both deserve my personal thanks, as well as
those of the company’s stakeholders.
Digital developments
Our direct to consumer focus extended beyond linear channels.
November saw the launch of BBC Store in the UK, which allows
viewers to buy and keep programmes they want to enjoy beyond
the 30 day licence fee funded BBC iPlayer window. Outside the
UK, we spent the year working up plans and partnerships for over
the top services (OTT), namely a subscription ‘best of British’
archive proposition that we will launch in the USA in 2016, and an
authenticated TV player to complement our existing channels in
Asia, which will also launch later this year in Singapore.
The year ahead
As a result of all activity outlined here, we enter the new financial
year on the back of strong results, with positive prospects. We
take confidence from the full-year effect of cost efficiencies and
strong financial discipline, and a content slate that includes a
fourth series of Sherlock, Doctor Who companion piece Class,
SS-GB, The Collection, the all-new Top Gear, and Planet Earth II,
Sir David Attenborough’s sequel to the globally successful natural
history programme. We do, however, anticipate further market
change in the year ahead, with the rising cost and accessibility of
premium content a particular concern. We will nonetheless
continue to target further top line growth and another strong year
of returns.
BBC.com, the international website, for which BBC Worldwide
sells advertising and creates international feature sections,
continued to build on the previous year’s success, reaching an
average of 89.1m monthly unique browsers (2014/15: 85.5m) and
generating 1.1bn page views. Our six features sections also
achieved ongoing growth, attracting a monthly average of
11m unique browsers (2014/15: 8.3m), up 38% year on year.
Efficiencies
Against the context of the market changes, particularly the
content costs outlined above, and the wider BBC efforts to reduce
operating costs across the Group, we worked particularly hard on
our operational cost base in the year. In total we ended the year
Tim Davie
Chief Executive, BBC Worldwide and Director, Global
5
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
A global content partner
A strong year in content
2015/16 saw us deliver another unrivalled content slate, with top-selling titles including Doctor Who S9, Orphan Black S3, The Hunt,
War and Peace and Sherlock: The Abominable Bride, with the last being sold to 216 territories. There were further format sales of Top
Gear and The Great Bake Off, while new format successes included You’re Back in the Room.
Against a backdrop of industry consolidation, new market entrants and the rising cost of content, we remained committed to our
strategy of focusing our investment into premium content. We invested £161.6m in content (2014/15: £180.5m), down on the previous
year due to the full year effect of the part-disposal of BBC AMERICA, but with the underlying rate broadly consistent year on year.
An integral part of the BBC
BBC content remains vitally important to our business, with 55% of revenue generated from content made by BBC Production, now
BBC Studios. In return, our funding underpins many programmes seen on screen by licence fee payers. In 2015/16, we invested
£92.7m in BBC-commissioned content (2014/15: £94.4m). This supported programmes across the BBC’s domestic channels, with
stand-out successes from BBC Production including Luther S4 and Thirteen.
Other innovative ways of supporting BBC content-making included investment in Natural History Unit purchases of 4K cameras and
in the increased post-production costs of delivering in UHD+HDR, with Planet Earth II being the first series to benefit. The pilot of
Getaway Car came out of a Top Gear spin-off development project jointly funded by BBC Worldwide and BBC Entertainment.
With changes to BBC Production underway, we plan for BBC Studios to be a key strategic partner, remaining central to
BBC Worldwide’s content strategy.
Nurturing future talent
Nurturing on and off screen talent is a core part of our business and helps to support UK creativity. In the year we furthered this
commitment through new development schemes. The Paper to Pitch Fund aids the development of new formats, helping indies and
BBC Production bring their ideas closer to commission and strengthening our pipeline. The response has been overwhelming, with
several shows in development. We have also worked with our production partners to increase the opportunity for new writers to secure
commissions in the UK or internationally, with targeted support to fast-track development and strengthen our relationship with emerging
talent.
Building creative partnerships
As well as working with the BBC’s in-house production arm, BBC Worldwide works with over 250 UK independent production
companies, who choose to partner with us. This year, we deepened long-standing relationships with indies and forged new ones,
including equity stakes in Amazing Productions, Mighty Productions, Red Planet Pictures (Entertainment) and Greenbird Media.
We drove creative deal-making: facilitating international co-productions such as The Hunt; bringing on board digital partners like
Amazon for Lookout Point and Artis Pictures Production’s The Collection; securing deals beyond the TV screen with Shanghai Media
Group for the Earth: One Amazing Day (w/t) feature film; and forming innovative partnerships with new content-makers, such as
YouTubers Joe Sugg and Caspar Lee.
Looking ahead
2016/17 promises to be another stellar year of content. We continued to focus our investment on premium content, notably in high-end
drama, entertainment and natural history. We have secured natural history landmark series for the next five years and during the
course of 2015/16 committed to a large number of investments in programmes delivering in 2016/17 and beyond. These included
Planet Earth II, Top of the Lake S2, the Top Gear re-launch and Doctor Who spin-off Class.
The market for English language drama has continued its rapid growth and the BBC has been a strong player in this market, with
runaway global hits such as War and Peace. We plan to keep around half of our content spend in drama in the coming year.
6
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Chief Financial Officer’s review
BBC Worldwide’s new CFO, Tom Fussell, joined the company in May. However, given the timing of his arrival, I am presenting this
year’s financial review, having been interim CFO for the last quarter of the year and during the preparation of this set of accounts.
1. Headline results
£m
Reported result
BBC AMERICA impact1
Underlying result
Headline sales
15/16
14/15
1,029.4
1,001.8
–
(36.7)
1,029.4
965.1
Headline profit
15/16
14/15
133.8
138.6
–
(9.9)
133.8
128.7
1
The overall impact differs from the separately disclosed seven months of headline sales and profit recorded in 2014/15 due to the subsequent share of BBC AMERICA profit
recorded in both years and the impact of intragroup eliminations as content sales to BBC AMERICA are no longer being eliminated as an internal sale.
Headline results
Headline sales of £1,029.4m (2014/15: £1,001.8m) were up 2.8%, a very good achievement in a changing market. As the CEO review
points out on page 4, this was equivalent to underlying growth in headline sales of 6.7% as the sale of a 49.9% interest in our US
channel, BBC AMERICA, in 2014 meant the prior year’s results benefited from seven months of full ownership, contributing £53.7m to
headline sales (creating a year-on-year BBC AMERICA sales impact of £36.7m). The major growth drivers were healthy trading with
SVOD services in a number of territories, continuing growth at our UK joint venture, UKTV, and a music licensing agreement. While the
proliferation of SVOD services brought new opportunities to exploit our extensive catalogue, this growing revenue stream is also
currently concentrated in a handful of dominant partners, whose commissioning and acquisition strategies remain under development.
Headline profit of £133.8m (2014/15: £138.6m) was also up 4.0% (after adjusting for a £9.9m year-on-year BBC AMERICA impact)
despite a second year of investment in the transition to new channel brands. Margin erosion on content sales has continued in the year
following pronounced increase in the costs of content. These costs, as a proportion of content sales, have increased by almost 10% in
the past two years. A headline profit margin of 13.0% (2014/15: 13.8%) reflected this inflationary pressure, in part but not wholly
mitigated through an active programme of efficiencies undertaken in the year.
2015/16 saw a marginal benefit to revenue and a small profit downside from foreign exchange movements. This was the net effec t of a
number of currency hedges and a weaker pound against our key currencies of the US dollar and the Euro, particularly in the key last
quarter of the year.
On a geographic basis, we delivered underlying growth in headline sales in every one of our regions. A decline in headline sales on an
actual basis in North America reflected the impact of BBC AMERICA described above, and in Australia and New Zealand reflected the
weakening of the Australian dollar during the year. Headline profit, after again adjusting for the impact of BBC AMERICA, was up in all
geographical segments, aside from Western Europe, where the business was affected by investment in new channel launches, the
closure of a small number of channel feeds and its above-average exposure to increased content costs. UK profitability was boosted in
part by the aforementioned music licensing agreement.
2. Segmental results
£m
United Kingdom
North America
Western Europe
Australia and New Zealand
Rest of World
Eliminations
Total
Headline sales
15/16
14/15
379.3
361.8
277.9
299.9
168.0
160.1
79.1
81.9
137.7
116.2
(12.6)
(18.1)
1,029.4
1,001.8
Headline profit
15/16
14/15
62.4
52.7
24.2
32.9
21.0
27.0
19.2
16.3
5.4
5.2
1.6
4.5
133.8
138.6
While we manage our company by region, we are this year also providing our results by business area. With these changes we believe
our transparency to be at least in line with the best-in-class in our sector, as set out in table 3 below.
3. Results by business area
£m
Content Sales
Branded Services
Production & Formats
Consumer Products
Eliminations
Total
Headline sales
15/16
14/15
384.2
324.4
335.7
370.5
173.0
163.0
179.1
197.6
(42.6)
(53.7)
1,029.4
1,001.8
Headline profit
15/16
14/15
68.2
62.7
49.7
55.4
10.6
15.8
6.9
3.4
(1.6)
1.3
133.8
138.6
The business classifications have been updated during the current year to better reflect the Board’s operational view of the business. The Board views the business based on
four business line segments: Branded Services (includes prior year’s channels business, as well as Ad Sales and BBC store). Content Sales includes Production and
Formats, and Consumer Products. The previously reported Other business lines have been reallocated across these four segments.
7
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Chief Financial Officer’s review (continued)
In Content Sales, growth of 18.4% speaks to a stable business in free-to-air and pay-TV, as well as the SVOD growth mentioned
earlier. Headline sales in Branded Services (which includes our channels) increased 5.2% year on year, after adjusting for BBC
AMERICA. Headline profit was up 10.5% on the same basis. Branded Services also includes the impact of a first full year of build and
operating investment in BBC Store. In Production & Formats we delivered revenue growth of 6.1%. Profitability was affected by a
greater proportion of our production income coming from lower margin scripted titles, some of which benefit from high end production
tax credits (captured as a tax benefit outside of pre-tax profit). Consumer Products, which includes DVD, remains a difficult category in
a market transitioning to digital product. A revenue decline of 9.4% here reflects the downward trend in that market, which also
impacted profitability: at the profit level this was offset by a music licensing agreement in the UK.
Statutory results
One of the main differences between our headline results and the equivalent statutory measures relates to our investments in
joint ventures and associates. We include our share of joint venture revenue – principally the results of UKTV – in headline sales.
We also include the pre-tax and pre-interest results of our joint ventures and associates in headline profit, rather than our share
of net profit, as included in the statutory measure. We do this because we view these investments as a fundamenta l part of our
ongoing activities.
Headline profit also excludes a number of non-statutory ‘specific items’ – principally restructuring costs and other similar
amounts customarily excluded from non‑statutory measures – which help to provide further clarity about our underlying trading
performance.
Our headline and statutory results are reconciled in table 4 below.
4. Statutory results
15/16
133.8
(10.6)
(3.4)
(13.4)
1.5
(4.6)
(2.8)
100.5
Headline profit
Share of interest and tax of joint ventures and associates
Pension deficit reduction payment
Other specific items
Gains on disposals
Other gains and losses
Net finance expense
Profit before tax
14/15
138.6
(9.4)
(8.1)
(4.8)
115.9
(5.7)
(2.7)
223.8
Specific items
Specific items are not defined under IFRS and may not be comparable to similarly titled measures used by other companies. Specific
items are material items which are highlighted by virtue of their size or importance in order to enable a full understanding of our
performance.
The presentation of these items is consistent with previous years.
Specific items are noted in table 4 and netted to a total of £13.4m (2014/15: £4.8m). The most significant item – reorganisation costs of
£12.8m – reflects the company’s efficiency programme carried out in the year. Reorganisation costs in the previous year mainly related
to the relocation of our head office in London.
Corporate activity
Corporate activity in the year, in line with the content investment strategy set out on page 6, focused on shareholdings in independent
production companies, four in the UK, as well as a majority shareholding in the strategically important market of South Africa. We also
invested further in German production vehicle Tower Productions. These investments help us to enhance our content pipeline in an
increasingly competitive market while also benefiting from a greater share of the success of titles produced through these partnerships.
8
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Chief Financial Officer’s review (continued)
Employees
5. Average number of employees
United Kingdom
North America
Western Europe
Australia and New Zealand
Rest of World
Total
15/16
460
360
315
179
450
1,764
14/15
438
446
324
197
424
1,829
Average headcount in the year was 1,764, down from 1,829 in 2014/15. The reduction in heads reflects the full year impact of
transferring BBC AMERICA employees to AMC Networks (AMCN) in October 2014, as well as further reductions following the
efficiency programme undertaken in the year, offset by an increase for BBC Advertising and BBC Store. Employee numbers by region
are detailed in the table above.
Tax
The majority of our profits arise in the UK, where we are headquartered, and our main exposures to tax arise in the UK, the USA and
Australia. The group does not adopt aggressive tax planning measures.
Our total tax charge for the year was £14.9m (2014/15: £38.3m) giving an effective tax rate of 14.8% (2014/15: 17.1%). The prior year
tax charge included £26.6m in respect of BBC AMERICA, including tax incurred on the proceeds of the sale. The impact of this
disposal, coupled with the higher rate of tax in the USA, largely explains the overall reduction in our effective tax rate.
Our tax rate is lower than the standard UK corporate rate largely due to the inclusion of our post-tax joint venture and associate profits
in pre-tax income, as well as the production tax credits we receive on our UK‑based production activity.
Cash and net debt
Operating cash flow of £152.3m (2014/15: £191.0m) reflects investment in working capital, particularly for digital content sales, offset in
part by working capital released from production activity and a reduction in tax paid due to lower taxable profits and timing of tax
payments.
The previous year saw a cash inflow from the partial disposal of BBC AMERICA, we received the remaining deferred proceeds in the
year. This allowed us again to supplement returns to our parent, albeit it to a lesser extent than last year.
Notwithstanding the boost that this transaction gave us both this year and last, our total shareholder return of £222.2m (2014/15:
£226.5m), as described in the Chairman’s statement, is close to last year’s record. These returns primarily capture our corporate
dividends and investment in BBC commissions, with the balance made up of brand licences and other smaller contributions to our
parent.
Average net debt throughout the year was £77.8m (2014/15: £32.4m) and we ended the year with net debt of £122.1m (2014/15:
£69.2m). Our debt facility with BBC Commercial Holdings Limited provides us with a maximum facility of £202.2m, of which the final
£30.0m is conditional on an equivalent holding in cash.
Looking forward
BBC Worldwide begins the new financial year with a strong slate and future pipeline of content, with over a third of our 33-strong
portfolio of owned and operated channels under new BBC brands, and well-advanced plans for direct-to-consumer digital products in a
number of key markets. While we face market conditions that are changeable, with a relatively high degree of industry and consumer
turbulence, these attributes nonetheless mean that we are well-equipped to continue to serve existing and new clients, audiences and
partners with the premium British content on which our business has founded its success over many years.
Suzanne Burrows
Interim Chief Financial Officer, (January – May 2016) BBC Worldwide
9
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
United Kingdom
Growth at a time of investment
Our United Kingdom business exists to extend audiences’ enjoyment of the BBC programmes they love. Highlights this year included
the launch of BBC Store, a new relationship with YouTube stars Joe Sugg and Caspar Lee, and growth in content sales.
We delivered a year of significant growth, with particularly strong performance from UKTV and content sales. Headline sales were up
4.8% to £379.3m (2014/15: £361.8m), while headline profit was up 18.4% at £62.4m (2014/15: £52.7m).
A strong content pipeline saw our content sales business enjoy 8.5% year-on-year growth, with the continuation of agreements with
Amazon and a renewal with Netflix. Our 50% ownership of UKTV, a joint venture with Scripps Networks Interactive, Inc., remained a
core contributor to our portfolio. UKTV reported revenue and profit growth in the 12 months to 31 December 2015 of 12.7% and 10.5%
respectively, made around £148m investment in content and related launches, while delivering record share of commercial impacts of
9.3%, with BBC programmes featuring in an average 41% of UKTV’s schedule but accounting for 47% of all impacts.
We expanded in digital, launching BBC Store, which enables UK audiences to buy, download and keep BBC programmes, from recent
hits such as Happy Valley to TV favourites like Only Fools and Horses. At year end the service offered audiences almost 9000 hours,
making it the largest collection of BBC programmes available to own.
Our focus on profitability, along with wider digital availability of titles through BBC Store, led us to close our retail website, BBC Shop.
Investment in BBC Good Food resulted in bbcgoodfood.com recording a 22.0% year-on-year increase in unique browsers and an alltime high of 20.5m in December alone, up 13.5%. The magazine held on to the top spot in the Core Food magazine market. We also
relaunched topgear.com.
Our DVD and download businesses enjoyed widespread distribution thanks to a steady stream of BBC hits including Peter Kay’s Car
Share, War and Peace and Doctor Foster. We worked with YouTube stars Joe and Caspar to release their first DVD. At launch, Joe &
Caspar Hit the Road achieved the biggest day one pre-orders for any title on Amazon.co.uk in 2015.
The UK licensing business continued to deliver global best in class partnerships that enable fans to engage with our brands. We
announced Fisher Price as the master toy licensee for Go Jetters and launched Doctor Who LEGO® sets, with Doctor Who also
featuring alongside Hollywood movie properties in the Warner Bros. Interactive Entertainment video game LEGO® DIMENSIONS.
We extended our publishing deal with Penguin Random House, which became the global publisher and distributor of BBC Audio
content. Meanwhile in March we completed the licensing agreement of our extensive Radio and Music rights catalogue.
2015/16 was also a busy year for our Live Entertainment business. The Doctor Who Festival attracted over 14,000 visitors over three
days in November. We also announced a new partnership with events company SME to bring Countryfile Live to audiences in August
2016.
As we move in to 2016/17 we will continue to operate multiple routes to market, protect the profit in our physical revenue streams and
invest for growth in our digital businesses.
10
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
North America
Building global brands
Our largest business outside the UK, BBC Worldwide North America operates in a highly competitive media market. An unparalleled
supply of British programming ensured ongoing success in content sales, co-productions and strategic partnerships. Our LA-based
studios – BBC Worldwide Productions and Adjacent Productions – also remained strong, producing formats and originals.
2015/16 marked the first full year for BBC Worldwide North America without BBC AMERICA consolidated into its financial results,
following the sale of a 49.9% stake to AMCN. Headline sales and profit fell from £299.9m to £277.9m and £32.9m to £24.2m, mainly
due to reduced ownership in BBC AMERICA. However, once adjusting for the derecognition of BBC AMERICA, headline sales saw
underlying growth of 5.6% helped by strong sales in SVOD, resulting in 5.5% underlying profit growth.
BBC AMERICA’s success continued with increased awareness and viewer engagement. In a year in which two-thirds of US
entertainment networks posted declines, BBC AMERICA recorded its best year ever in total viewers. Doctor Who S9, Orphan Black S3
and Top Gear S22 helped to more than double the network’s audience average.
Drama helped drive growth in the Adult 25-54 demographic with Broadchurch S2 and Luther S4, the latter delivering a 37% increase
from series three. Out of 121 returning dramas in the USA, 16 recorded Adult 25-54 audience growth on prior series; three of these
aired on BBC AMERICA.
Luther’s Idris Elba earned Critics’ Choice and Screen Actors Guild Awards, and Golden Globe® and NAACP Image Award
nominations, and Tatiana Maslany received her first Emmy® nomination for Orphan Black.
BBC Worldwide Productions’ hit show Dancing with the Stars continued to delight audiences with two new series for ABC, and retained
its position as a Top 10 most watched entertainment programme, which it has held for the past decade. Meanwhile, Adjacent
Productions’ original series for National Geographic Channel, Life Below Zero, was the channel’s number one programme for a third
year.
PBS and BBC AMERICA deals underpinned the US co‑production strategy, resulting in projects like Big Blue Live with PBS and
Thirteen with BBC AMERICA. We also signed Vikings Unearthed and Undercover in the year with these partners.
The Doctor Who brand continued to grow across North America in 2015/16. A significant deal was signed towards year-end granting
Amazon exclusive US SVOD rights for the series, allowing us to maximise digital revenue and reach new audiences. In Canada, a
new, exclusive multi-platform licensing agreement for Doctor Who was signed with Bell Media for its terrestrial channel Space and
SVOD service, CraveTV™. These deals helped boost overall digital content sales, by over 60% year on year.
In the USA and Canada, cinema events for BBC intellectual property have become a new revenue driver, with Sherlock: The
Abominable Bride selling over 190,000 tickets at the beginning of 2016.
BBC.com traffic grew by 7.4% – reaching almost 39m unique browsers each month. With a focus on immersive content and social
audience development, the feature sections were the site’s fastest growing areas, increasing 40.0% year-on-year to 7.2m unique
browsers. Meanwhile, BBC Advertising welcomed a significant uplift in the second half of 2015/16, with 12.7% year-on-year growth,
largely driven by features content, programmatic sales and video.
In the year ahead, we plan to evolve the strategy further and capitalise on technology advances with the launch of a new OTT SVOD
service in the USA. The service will support our ambition to grow our content offering and reach audiences looking for British
programmes, while complementing the programming on BBC AMERICA and with other partners.
11
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Australia and New Zealand
Strong across all businesses
BBC Worldwide Australia and New Zealand welcomed another year of growth, attributable to a number of factors including strong
established partnerships, a proliferation of new ventures and the continued quality and breadth of our channel and content sales
businesses.
The Australia and New Zealand business strategy delivered well, with 5.3% headline sales growth in local currency, continuing with the
growth achieved in 2014/15. Translated into sterling, headline sales were £79.1m (2014/15: £81.9m) while profits increased to £19.2m
(2014/15: £16.3m).
In its first full year BBC First sustained strong audiences, reaching over 3m viewers and attracting a broader audience for dramas
including Banished, the channel’s first locally commissioned title. Aired in June 2015, the series became the highest rating title across
all plays on BBC First, with a series audience average of 1.8m. Throughout the year the channel’s tentpole titles – Call the Midwife,
War and Peace and The Night Manager – regularly appeared in the Top 10 rating titles on the Foxtel platform.
2015/16 was an exceptional year for CBeebies, which delivered a 100% ratings increase on last year, with notable titles such as Hey
Duggee. BBC UKTV delivered a 7.1% increase in audience share on the previous year in Australia, while in New Zealand it recorded
its highest share in over three years at 3.8%. Our first full year on Fetch TV, and their growth in subscribers, also supported channel
growth for BBC First, BBC UKTV and BBC Knowledge in Australia. The strength of the subscription television market, a full year of
BBC First and significant sponsorship growth across our channels resulted in our advertising revenue recording a 19.9% increase
year on year and 19.5% increase in profit.
We continued to reap the benefits of our new sales model, rolled out in 2014, focusing on showcasing premium drama titles on BBC
First. These included Doctor Foster, Wolf Hall, The Honourable Woman and popular returning series Call the Midwife and Death in
Paradise. The new sales agreement enabled ABC to broadcast important titles in a second window with some first window
programmes too. Nine secured The Hunt as a pre-sale title, while Ten acquired a package of popular natural history titles featuring
Shark and a range of Sir David Attenborough documentaries.
In our digital sales business, a new deal with Foxtel’s streaming platform Presto saw 122 titles made available to their customers and
increased our offering in the digital arena to 17 platforms. In a first for premium BBC drama distribution in Australia, Sherlock: The
Abominable Bride premiered on SVOD service Stan.
TV format sales saw the 15th series of Dancing with the Stars on Seven in Australia and the return of the format in New Zealand after a
six-year break, alongside new productions of Rachel Khoo’s Kitchen Notebook Melbourne for SBS and The Great Australian Bake Off
for Lifestyle FOOD. 2016 will see six new format commissions air, including the hypnosis entertainment show You’re Back in the Room
for Nine and TVNZ and a first series of Coast and Mastermind for TVNZ, while Coast returns to The History Channel later this year.
Away from programming we extended our live entertainment offerings to audiences, hosting Australia’s first official Doctor Who Festival
and a three-day event for YouTube stars Joe Suggs and Caspar Lee, with tickets to the duo’s show selling out within 20 minutes and
two further shows added. We were also delighted to announce BBC Proms Australia, which took place shortly after year end over four
days in April, and marked the first time the BBC Proms had been held outside the UK in this way. In addition, wildlife presenter Steve
Backshall sold over 35,000 tickets across Australia on his debut Deadly 60 tour.
We did encounter some challenges within the year, most notably due to rapid changes in the online retail market. These changes, and
the decline of the DVD market, led us to close BBC Shop Australia in March and withdraw from the consumer products wholesale
market.
As we progress into the coming year our focus will remain on growing key business areas, looking for new growth opportunities and
championing partnerships to ensure we remain on course to keep delivering against our strategy.
12
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Executive Committee
Marcus Arthur
President, UK, Eire, ANZ and BBC Advertising
Marcus moved into his current role in 2013. He is responsible for BBC Worldwide’s businesses in the UK, Eire, ANZ and for
BBC Advertising. Marcus joined BBC Worldwide in 1991 and has held roles including Managing Director, BBC Magazines, and MD of
Brands, Consumers and New Ventures.
Tim Davie
Chief Executive, BBC Worldwide and Director, Global
Tim took up his current role in 2013. He is also Chairman of Comic Relief, a Trustee of the Tate and Vice-Chair of the RTS. During his
11 years at the BBC, Tim has held the positions of Acting Director-General, Director of Audio & Music and Director of Marketing,
Communications & Audiences. Prior to this, he worked at PepsiCo and Procter & Gamble.
Paul Dempsey
President, Global Markets
Paul took up his current role in 2013. He is responsible for building BBC Worldwide’s portfolio across predominantly non-English
speaking territories, known collectively as Global Markets. Paul joined BBC Worldwide in 1998. His previous roles include Interim CEO
and MD Consumer Products.
Charlotte Elston
Director of Communications
Charlotte joined BBC Worldwide as Director of Communications in 2010. She oversees all areas of communications globally including
external PR, internal communications, corporate affairs and events. Charlotte has previously worked at Aegis Group plc, Pearson,
Brunswick and Edelman PR.
Martyn Freeman
General Counsel & Company Secretary
Martyn was appointed to his current role in 2011. He has responsibility for all legal, business affairs, policy and regulatory matters and
from January 2015 became Company Secretary. Previously, Martyn held a variety of roles across the BBC, including Head of Business
Affairs, Radio & Music, Factual & Learning and News.
Kirstin Furber
People Director
Kirstin is responsible for Human Resources across BBC Worldwide. She was appointed to this position in 2013, having previously been
SVP HR. Prior to joining BBC Worldwide, Kirstin held roles at Twentieth Century Fox, Discovery Channel, Ziff Davis, Warner Bros. and
Granada Media Group.
Tom Fussell
Chief Financial Officer
Tom began his role with BBC Worldwide in May 2016. He joined from Shine Group, where he was CFO for two years and successfully
completed the sale of Shine into a new joint venture, as part of its merger with Endemol. Prior to this Tom held positions at
HarperCollins, Random House and the BBC. Tom is a Fellow of the Institute of Chartered Accountants in England and Wales.
David Gibbons
Chief Operations Officer
David is responsible for driving the operating model of the company. He is functionally accountable for Global Operations, Global
Business Services and oversight of our relationship with the newly established BBC Technology division. He joined BBC Worldwide in
2013. Prior to this he held senior leadership positions in SEEK, GE Capital, Gap and Nike.
Helen Jackson
Chief Content Officer
Helen became Chief Content Officer in 2013. She oversees the creative and commercial vision for BBC Worldwide’s content strategy,
covering commissioning, development and acquisition activity, channels’ curation and editorial standards. Helen previously established
BBC Worldwide’s Indie Unit.
Jackie Lee-Joe
Chief Marketing Officer
Jackie took up the position of CMO in November 2015, joining from Skype, where she was Global Director for Audience, Entertainment
Marketing & Broadcast Media. Jackie has over 20 years of marketing experience in blue chip brands including Virgin Mobile, Carphone
Warehouse and Orange.
David Moody
Director of Strategy
David is responsible for all aspects of the company’s direction and strategy. David joined BBC Worldwide in 2004. He previously held
roles in BBC Ventures, The LEK Partnership, Singapore Telecom International and United News & Media and co-founded Dataroam.
Ann Sarnoff
President, BBC Worldwide North America
Appointed to this position in 2015, Ann is responsible for driving growth and profit across the company’s diversified business divisions
in the USA and Canada. Ann was promoted to President from COO and prior to joining BBC Worldwide, she worked as President, Dow
Jones Ventures, and as Executive Vice President, Consumer Products and Business Development at Viacom.
14
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Corporate governance report

At any time in the year, there were six Directors of the company.
Four Non-executive Directors: Tony Hall (BBC Director-General)
as Chairman; Anne Bulford (Managing Director, Finance &
Operations, BBC); Dharmash Mistry and Sir Howard Stringer.
There were also two executive Directors: Tim Davie
(Chief Executive, BBC Worldwide and Director, Global)
and Andrew Bott (Chief Financial Officer, BBC Worldwide).

The 4CC approvals framework is embedded within our
governance structure and ensures that key projects and
investments are subject to rigorous evaluation, ensuring
compliance with each of the 4CCs prior to the start of the service
or, where relevant, the completion of any equity transaction.
In November, Andrew Bott took the decision to leave BBC
Worldwide and stood down with immediate effect as a Director of
the company. A search for a permanent Chief Financial Officer
(CFO) culminated in the appointment of Tom Fussell on 3 May
2016 as CFO and a Director of the company. During the period
between November 2015 and May 2016, Martyn Freeman
(General Counsel & Company Secretary, BBC Worldwide) was
temporarily appointed as a Director until January, when Suzanne
Burrows took up the Directorship as interim CFO until 3 May.
The BBC’s Fair Trading arrangements (which include the 4CC
approvals arrangements) have been accredited with the ISO
9001:2008 quality standard and are subject to scrutiny by
independent auditors commissioned by the BBC.
Editorial standards
We are required to meet the standards set out in the BBC’s
Editorial Guidelines and the Advertising and Sponsorship
Guidelines for BBC Commercial Services. We operate a
comprehensive framework which sets out clear editorial
accountability for each business area and have a dedicated
Editorial Standards team providing training, support and advice
across the company.
Principal responsibility for the day-to-day management of BBC
Worldwide rests with the BBC Worldwide Executive committee
(WEx), which is chaired by the Chief Executive (CEO), Tim Davie.
Further information about WEx may be found at
www.bbcworldwide.com.
WEx delegates authority to two principal groups: the Content
Investment Group (CIG) and the Investment Review Group (IRG).
Privacy, information and content security
Consumers, talent, employees and partners trust us with their
personal information and expect us to protect their privacy.
Our data protection and security programmes govern how we
collect, use and manage their information: from safeguarding
confidentiality and respecting their permissions and preferences,
to protecting and securing their information. Within the year, our
privacy framework was audited by the BBC’s Internal Audit
function and was found to be operating to satisfactory standards
of control.
The primary function of CIG is to ensure that all content
investment decisions are taken in line with the approved financial
guidelines and our overall business strategy. It is responsible for
reviewing and executing our global content strategy and
recommends changes where necessary. CIG also approves
investments for content distribution and broadcast rights as well
as monitoring our content pipeline in the context of performance
and strategic development. Investments reviewed this year
included Class and Getaway Car. CIG is chaired by the Controller
of Content Investment and is responsible for all content
investment decisions between £500,000 and £2m. For those in
excess of £2m, CIG reviews and recommends such investment
proposals to WEx for approval.
As a company that prides ourselves on the quality of the content
we commission and create, it is vital we protect marketing and
promotional assets, scripts and programmes from unauthorised
release. With this in mind, we have continued to develop our
content security framework as part of a wider project focused on
the security of our information assets.
Our employees are an integral part of protecting and respecting
information. Over the last 12 months, further work has focused on
building a strong culture where our employees are able to display
a good awareness of privacy and security risk. We also revised
our Privacy and Information Security training module in line with
possible threats to the company, which we will roll-out to our key
content partners as part of a wider assurance initiative in the new
financial year.
IRG is responsible for reviewing and approving non-content
financial investments, including proposals relating to independent
production company funding arrangements above £1m. For
investments that are greater than £2m, IRG reviews and
recommends those investments to WEx for approval. IRG is
chaired by the CFO.
Commercial Criteria and Fair Trading Framework
The BBC’s Royal Charter and Agreement requires all of the
BBC’s commercial activities to comply with the four Commercial
Criteria (4CC). As such, our activities must:


exhibit commercial efficiency; and
comply with the BBC Trust’s Fair Trading Policy, the BBC’s
Fair Trading Guidelines and, in particular, avoid distorting the
market.
A new European law, the General Data Protection Regulation
(GDPR), was finalised in April 2016, which will replace current
data protection laws. It brings with it a range of enhanced
requirements and substantially increased fines of up to 4% of
global turnover. We will be reviewing and improving our
processes over the next year to ensure we are compliant when
the GDPR comes into force in 2018.
fit with the BBC’s Public Purposes;
not jeopardise the good reputation of the BBC or the value of
the BBC brand;
15
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Risk management
We are committed to supporting effective risk management
practices to safeguard our people, reputation, assets and
commercial performance. These practices protect the reputation
of the BBC brand as we showcase it internationally through
branded services, content sales and other IP exploitation.
Our approach to and assessment of reputational risk is aligned to
the BBC’s public purposes, values and editorial standards.
Tim Davie, CEO, along with WEx, has ultimate sign-off on
matters relating to risk management. A Risk Management and
Internal Controls Committee comprised of WEx members and
senior managers reviews and challenges our corporate risk
register on a quarterly basis. We ensure employees are aware of
the key risk themes through communicating these via a number
of channels as detailed below.
Commercially, risk management helps ensure stability of financial
returns to support the UK licence fee. Operationally, it ensures
continuity of operations and resilience against unpredictable
events.
Risk themes
Strategic impacts
Mitigation
Brand, reputation and standards
Risk that audiences lose confidence in
the integrity of our business or our
content. Risk we fail to represent the
values of the BBC to global audiences.
Harm to our reputation,
our relationship with
audiences and to the
credibility of the BBC
brand.
Leadership and management behaviours that promote the
BBC values embedded within our company’s culture.
Commitment to delivering honest and open communications.
Policy framework, internal communications and HR processes
inform and demonstrate appropriate behaviours. Inductions,
mandatory training and regular staff survey to drive
engagement.
Indie and JV relationships
Risk we do not achieve the potential
from our indie, joint venture (JV) and
associate
relationships,
principally
UKTV, BBC AMERICA and Immediate
Media.
Under-delivering
against
audience
expectations, and our
ambitions
for
the
relationship.
Content and business expertise brought through representation
on indie and JV Boards. Commitment that our objectives are
focused on creativity and support content ambitions. JV
formation is always backed by a detailed definition of the JV
benefits, purpose, mechanics and governance, with appropriate
safeguards over editorial control. The approvals framework,
encompassing BBC Public Service, ensure that potential deal
benefits to the UK licence fee payer are delivered.
Market transformation and disruption
Risk that we do not adapt our content
and business strategy responsively
enough to meet audience priorities
and respond to disruptive competitors
in a consolidating market.
Lower visibility for BBC
content internationally,
poor
commercial
returns for indies and
for the UK licence fee
payer.
Strategy team supports the business and monitors market
changes. Use expertise inherent in the business and in-depth
local knowledge of international markets in regions. JV partners
bring insight and knowledge. Internal transformation projects to
anticipate market trends and ensure our sales strategy, sales
infrastructure, people skills and business relationships are in
the best place to respond to challenges.
Content supply
Risk that ongoing acquisition and
consolidation across the indie sector
restricts the addressable market for
rights in priority genres. Risk from BBC
Studios as it makes the transition to full
commercial operation.
Volume,
affordability
and commercial appeal
of content at risk. Risk
to the
brand
and
channel strategies.
Dedicated Content division with expertise in content acquisition
and relationship management. Output deals with key indies and
investment stakes to increase our pipeline of creative output.
Commitment to maximising indie returns alongside the BBC
Store direct-to-consumer service and channels strategy.
Channels and services
Risk that in-territory we do not extract the
full value from our affiliate relationships,
or the appropriate brand visibility or the
right premium vs. free-to-air channel mix.
Risk that we do not achieve sufficient
scale in some regional markets. Risk to
launching new direct to consumer
service such as BBC Store and
forthcoming over the top offer in the
USA.
Reduce our ability to
showcase BBC content.
More
vulnerable
to
disruptive
digital
services. Risk operating
with sub-scale regional
businesses.
Experienced international channels team with a proven track
record of leading negotiations and managing successful
channel launches. Ensure regions have extensive knowledge of
the affiliate landscape and the expertise to secure the right
channel mix, platforms and relationships. Leadership
experience and insight into markets to ensure we attract the
right partners, build effective relationships and develop the best
propositions in the context of global ambition and strategy.
16
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Risk management (continued)
Risk themes
Strategic impacts
Mitigation
Information security
Risk that information security controls
are
compromised
and
systems
disrupted, data deleted or content
assets misappropriated.
Damage to reputation.
Disclosed assets have
reduced editorial or
commercial
value.
Disruption to business
operations. Loss of
data.
New content path defined for high-value content, including
dedicated infrastructure and a content handling team.
Centralised global solution for regional post-production
activities. New information security infrastructure capabilities,
additional expertise and resources, and a global network
convergence project in progress.
Economic climate and trading
performance
Business performance is sensitive to UK
and international economic conditions,
especially in the USA and Australia, as
well as exchange rate movements.
Adverse impact on cash
flows
and
reported
financial results.
Business is diversified across both regions and revenue
streams. Central management of budgets and performance,
cash-flow forecasting and prudent debtor management. Riskaverse approach to foreign currency management.
Regulatory and compliance
Potential for non-compliance with UK
and international laws, especially
regulatory changes and legislation with
extra-territorial reach.
Civil
or
criminal
challenge.
Financial
penalties. Reputational
damage.
Robust, enforced framework including WEx sponsorship,
mandatory training programme, policies, guidelines, regular
reporting and specialist committees. Oversight by BBC
Worldwide Board, WEx and Compliance Steering Group.
Central Business and Legal Affairs resources include specialist
advisers, regional expertise and local compliance champions
to support the framework.
Business continuity, safety and
security
Risk of disruption to operations,
infrastructure and loss of revenue
following a major incident. Increase in
global terrorism.
Potential
for
injury
or death. Disruption to
business operations.
Reputational damage.
Security and safety management arrangements supported by
policy framework, communications, forums, guides, specialist
security and safety advice. Offices and business operations
covered by continuity plans. International travel safety training.
17
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Directors’ Report
The Directors present their report and the audited consolidated financial statements of BBC Worldwide Limited (the “Company”) and its
subsidiary undertakings (together the “Group”) and the Group’s interest in associated undertakings and joint ventures for the year
ended 31 March 2016.
Principal activities of the Group
The trading activities of the Group focus on the acquisition, development, exploitation, licensing and sale of intellectual property. Rights
are acquired from BBC Public Service and from independent owners of intellectual property and are exploited through a number of
businesses, both wholly-owned and partly-owned through associates and joint ventures, across multiple formats. The business is
structured across seven geographical regions; these regions are grouped into four areas: UK, North America, Australia and New
Zealand and the rest of the world, principally non-English speaking markets, known collectively as Global Markets. The two global
business areas, Content and Brands, set the strategic framework and parameters for activities within the regions and keep a close
connection into BBC Worldwide's ultimate parent, the British Broadcasting Corporation.
Strategic Report
A review of business performance, including likely future developments, is included in the Strategic Report on pages 4 to 13. The
management of the business and the execution of the Group’s strategy are subject to a number of risks. The key business risks and
uncertainties affecting the Group are discussed on pages 16 to 17.
Results and dividends
The consolidated profit for the year distributable to equity shareholders of the Company was £85.6m (2015: £185.5m).
Dividends of £105.5m (2015: £111.3m) were proposed and paid during the year and no further dividends have been proposed by the
Directors post year end (2015: £nil).
Acquisitions and disposals
During the financial year the Group acquired equity stakes in UK independent production companies Amazing Productions Limited,
Mighty Productions Limited and Red Planet Pictures (Entertainment) Limited. It also acquired a majority stake in South African
production company Rapid Blue (Pty) Limited. Full details of the Group’s acquisitions and disposals are included in the Chief Financial
Officer’s Review on pages 7 to 9.
Directors
The Directors who served during the year and until the date of this directors’ report were:
Tony Hall (Chairman)
Tim Davie
Anne Bulford
Dharmash Mistry
Sir Howard Stringer
Andrew Bott (resigned on 9 November 2015)
Martyn Freeman (appointed 9 November 2015 and resigned on 29 January 2016)
Suzanne Burrows (appointed 29 January 2016 and resigned on 3 May 2016)
Tom Fussell (appointed on 3 May 2016)
Going concern
After making enquiries, the Directors have a reasonable expectation that the business has adequate resources to continue in
operational existence for the foreseeable future, and accordingly the going concern basis continues to be adopted in the preparation of
the accounts. Further information about the going concern assumption is given in note 1b to the consolidated financial statements.
Directors' interests and indemnities
No Director had any interest in the share capital of the Group at 1 April 2015 or 31 March 2016. No rights to subscribe for shares in or
debentures of the Company or any other group company were granted to any of the Directors or their immediate families, or exercised
by them, during the financial year. Directors’ and Officers’ insurance cover was in place throughout the financial year as appropriate.
Additionally, an indemnity is in place for the Group’s nominated Directors on the board of Australian entities and for BBC Worldwide
Limited Directors and Officers in respect of Branch operations in Australia. The nominated Directors are held harmless in relation to
legal claims against them in their capacity as Directors and Officers, except in the event of fraud, dishonesty or wilful default. The
indemnity covers all liability incurred by nominated Directors and Officers to the fullest extent permitted by Australian law and is
intended to offer protection to the nominated Directors and Officers in addition to the cover under the Group’s Directors’ & Officers’
insurance policy.
Disabled employees
The Group gives full consideration to applications for employment from disabled persons where the candidate’s particular aptitudes and
abilities are consistent with adequately meeting the requirements of the job. Opportunities are available to disabled employees for
training, career development and promotion. Where existing employees become disabled, it is the Group’s policy to provide continuing
employment wherever practicable in the same or an alternative position and to provide appropriate training to achieve this aim.
18
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Report on Directors’ remuneration
Year ended 31 March 2016
We finalised our plans to simplify our Reward offering this year. Both Profit Share and Deferred Bonus plans are now closed and will
not be replaced. Directors, senior managers and all other employees now have very simply structured pay packages, which comprise a
basic salary and a performance-related bonus that is at risk if the required results are not achieved.
Wherever possible, we use salary survey data to identify the pay range in the market for a specific role in a particular location. As a
matter of policy we continue to pay at or below the market median in the UK and no more than 10% above the local market median
elsewhere. In the year we took the opportunity to regrade our roles to better support career paths. This work will form the foundations
of a global job grading structure that will ensure pay is correctly positioned at all levels in BBC Worldwide, which will be fully
implemented within the next financial year.
The Sales Compensation Framework, developed with the aim of consistently focusing our sales teams on delivering the best possible
return to the BBC and our indie partners, was implemented in 2014/15, paying bonus to sales staff in proportion to targets achieved.
We will continue to monitor the scheme, refining it as necessary, to ensure that it achieves maximum value for the BBC.
Governance
There were no significant changes to remuneration governance arrangements in 2015/16, with decisions affecting members of the BBC
Worldwide Executive (WEx) team and company-wide reward being taken by the BBC Executive Remuneration Committee. Salary
decisions affecting other staff earning more than £125,000 (or local equivalent) per year, and severance payments in excess of
£75,000, continue to require approval by the BBC Senior Management Remuneration Committee. The BBC Worldwide Pay Committee,
comprising the Chief Executive (CEO), Chief Financial Officer (CFO) and People Director, continues to review all significant pay
decisions.
No individual is responsible for setting his or her own remuneration.
Full details of all the above governance matters can be found in the BBC Annual Report and Accounts.
Executive Directors
This report summarises the remuneration of the CEO and CFO of BBC Worldwide, who are the sole Executive Directors of
BBC Worldwide.
Tim Davie was CEO for the full year. Andrew Bott was CFO from the start of the year until he resigned from his post in January and as
a Director of BBC Worldwide from the start of the year until November, following the submission of his resignation. In the interim Martyn
Freeman, General Counsel & Company Secretary, was appointed a Director of BBC Worldwide followed by Suzanne Burrows, who
was appointed a Director and interim CFO on 29 January. Further details on this are noted in Corporate Governance, page 15.
Base salary
Tim Davie’s annual base salary has remained unchanged since April 2013. Andrew Bott’s salary also remained unchanged, as did
Martyn Freeman’s.
Annual incentives
Annual incentives are provided through the BBC Worldwide Annual Bonus Plan, in which all staff participate (other than those on sales
schemes).
The Plan is a simple design, with a ‘Minimum Growth Hurdle’ (a threshold level of performance), a Target Performance level (set to be
stretching but, with substantial effort, achievable), at which Target Bonus is payable, and a Maximum Bonus Performance level
(above which no further bonus is payable), set significantly above Target.
Target Bonus for the CEO and the CFO is 50% of base pay earnings. Bonus for all Executive Directors is wholly dependent on the
performance of BBC Worldwide as this is deemed to be the most appropriate indicator of their performance.
Pension
Executive Directors who joined the BBC before 1 December 2010 are eligible to participate in the BBC Pension Scheme (the Scheme),
which provides for pension benefits on a defined benefit basis. Executive Directors who joined the BBC on or after 1 December 2010
are eligible to join LifePlan, which is the BBC’s defined contribution arrangement. The BBC pays matching contributions to LifePlan for
employee contributions between 4% and 5%. Employee contributions between 6% and 7% are matched plus an additional 1%.
Employee contributions of 8% or more receive the maximum employer contribution of 10%. There is no maximum pensionable salary
for contributions to LifePlan.
Executive Directors who decide not to join LifePlan or are not already an existing member of the Scheme are, subject to meeting the
relevant criteria, automatically enrolled into the National Employment Savings Trust (NEST). The BBC and employees currently pay 1%
of qualifying earnings to NEST. Individuals can choose to opt out of this.
20
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Report on Directors’ remuneration (continued)
Executive Directors’ pension arrangements may be reviewed and amended in response to changes in legislation or similar
developments.
Features of the BBC’s pension arrangements, including normal pensionable age, are provided in the table on page 23.
Details of the BBC Pension Scheme are available at www.bbc.co.uk/mypension/ and details of LifePlan can be found at
www.friendslife.co.uk/microsite/bbc/.
Components of reward
The following table summarises the current, key, fixed and variable components of reward (excluding sales incentives) for executives
and employees:
Element
Purpose and
to strategy
link
Performance
period
Operation
Base salary
Maintain a competitive
package, at the agreed
position
for
the
relevant local market,
recognising individual
contribution and the
scope of the role.
Not applicable
Reviewed annually, taking into account the industry in
which BBC Worldwide operates, location, individual
performance and responsibilities, and affordability.
1 year
Bonus, calculated as a percentage of base pay
earnings, is payable for achievement of headline profit
targets and, other than for members of the BBC
Worldwide Executive (WEx), an agreed level of
personal performance. The percentage varies by grade
(and, at lower levels, by country, in some cases).
Reward from current incentive plans
Annual incentives
Reward achievement
of short‑term strategic
goals
and profit
growth.
A reduced bonus is payable for achievement below
Target, subject to reaching a threshold level of
performance below which no bonus is payable, with
additional bonus available for achievement above
Target. For members of the Executive, bonus is
between 20% and 70% of base pay earnings, with the
top of that range payable at a level of profit considered
to be achievable only in exceptional circumstances.
The levels of profit performance attracting threshold,
target and maximum bonus are set by the BBC
Executive Remuneration Committee.
Benefits
Pensions
Pensions are offered in
line with normal market
practice.
Ongoing
21
Pensions are offered in accordance with the all
employee pension arrangements.
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Report on Directors’ remuneration (continued)
Element
Purpose and
to strategy
Life assurance
link
Performance
period
Operation
Life
assurance
is
offered in line with
normal
market
practice.
Ongoing
4 x salary for those who join the pension plan.
2 x salary for those who do not.
Private healthcare
Private healthcare is
offered in line with
normal market practice
at middle management
level and above.
Ongoing
Family cover for senior executives.
Single cover for other eligible employees.
Car allowance
With effect from 1 April
2014, BBC Worldwide
removed
the
car
allowance benefit for
all
new
Executive
Directors and senior
managers, to align with
arrangements for all
BBC employees.
–
Those who were already in receipt of a car allowance
have retained it. The car allowance is £6,300 per year.
CEO earnings for the last five years £000s
31 Mar 2016
664
31 Mar 2015
640
31 Mar 2014
670
1,334
31 Mar 2013
31 Mar 2012
926
Base Pay
Long-term incentives
Short-term incentives
Benefits
Pension
John Smith was CEO from the start of this five-year period until 31 December 2012.
Tim Davie has been CEO since 1 April 2013.
Figures do not include compensation for loss of office.
22
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Report on Directors’ remuneration (continued)
Scheme
Date closed
Accrual
Salary
Normal pensionable
age
Earnings cap
Pensionable salary
growth before the
earnings cap
is applied
Employee contribution
(% of pensionable
salary)
‘Old’ Benefits
Defined
Benefit
‘New’
Benefits
Defined
Benefit
30 September
1996
31 October
2006
60
ths
ths
accrual
60
accrual
CAB 2006
Defined
Benefit
CAB 2011
Defined
Benefit
LifePlan
Defined
Contribution
National Employment
Savings Trust (NEST)
Defined Contribution (Auto
Enrolment Arrangement)
30
November
2010
1 January
2012
Open to all eligible
employees
Open to
all eligible employees
1.67%
accrual
Adjusted in
line with
inflation
1.67%
accrual
Adjusted in
line with CPI
BBC will contribute
a maximum of 10%
of salary if
employee
contributes 8% with
lower sliding scale
BBC will contribute 1% of
qualifying earnings
N/A
N/A
Final
pensionable
Final
pensionable
Career
average
revalued
earnings
Career
average
revalued
earnings
60
60
65
65
Date of joining
before 1 June
1989 uncapped,
capped
otherwise
Capped at
£141,000
Capped at
£141,000
Capped at
£138,000
Uncapped
Minimum Earnings
£5,668p.a.
Maximum Earnings
£41,450p.a.
Limited at 1%
p.a.
Limited at
1% p.a.
Limited at
1% p.a.
No
restriction
N/A
N/A
7.5%
7.5%
4%
6%
Minimum employee
contribution is 4%
1% of qualifying earnings
Employment contracts
Employment contracts of Executive Directors recently employed by BBC Worldwide in the UK have a maximum notice period of six
months. Contracts are subject to earlier termination for cause. In the UK, if termination arises through redundancy, Executive Directors
are entitled to one month’s pay for each year of continuing service, up to a maximum of 24 months’ base pay (or 12 months’ base pay
for Executive Directors employed on or after 1 January 2013). This is subject to a cap of £150,000 in total.
Outside interests
Where there is no potential for conflict of interest, and with the prior agreement of the Chair of BBC Worldwide, Executive Directors
may hold one paid external directorship. Remuneration which arises from directorships may be retained by the Director. This policy is
to encourage the take-up of external Non-executive appointments as part of the Executive Director’s development as well as bringing
broader business skills to BBC Worldwide.
During the year, no Executive Directors held paid external directorships.
Non-executive Directors
The Non-executive Directors of BBC Worldwide during the year were Tony Hall (BBC Director-General), Anne Bulford (Managing
Director, Finance & Operations, BBC), Dharmash Mistry and Sir Howard Stringer, none of whom received any remuneration in respect
of their duties in this capacity.
23
BBC Worldwide Limited
Annual Report and Financial Statements
Year ended 31 March 2016
Report on Directors’ remuneration (continued)
Remuneration earned in the year ended 31 March 2016
Fee/base
pay
£’000
Executive Directors
1
Tim Davie
2
Andrew Bott
3
Martyn Freeman
4
Suzanne Burrows
Non-executive Directors
5
Tony Hall
5
Anne Bulford
5
Dharmash Mistry
5
Sir Howard Stringer
Total
Car
allowances
Annual
bonus
Total
2015/16
(excluding
PensionRelated
Single
Figure)
Taxable
benefits
Total
Total 2014Total
2015/16
15
2014-15
(including (including (excluding
PensionPensionPensionRelated
Related
Related
Single
Single
Single
Figure)
Figure)
Figure)
PensionRelated
Single
Figure
400
177
46
30
–
–
1
1
224
26
17
2
1
1
–
626
178
74
48
38
18
–
4
664
196
74
52
640
489
–
–
603
466
–
–
653
2
267
4
926
60
986
1,129
1,069
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
653
2
267
4
926
60
986
1,129
1,069
1
The BBC introduced a salary sacrifice arrangement on 1 June 2008 for Old and New Benefits members who joined the Pension Scheme before 1
November 2006 and for all Career Average Benefit members. From that date, terms and conditions of employment were changed for those employees
opting for the salary sacrifice arrangement and, as a result, employee pension contributions made via the salary sacrifice have been treated as
employer contributions, with a corresponding reduction in salary. Tim Davie’s base salary has not been adjusted to reflect the impact of the salary
sacrifice. His total salary sacrifice was £8,640 (2013/14: £8,532).
2
Andrew Bott was a Director of BBC Worldwide until 9 November 2015. Andrew Bott’s salary reflects the time he was a Director of the company.
3
Martyn Freeman joined the BBC in 1994 and was a Director of BBC Worldwide from 9 November 2015 until 29 January 2016.
4
Suzanne Burrows joined the BBC in 2009 and was a Director of BBC Worldwide from 29 January 2016 until 3 May 2016.
5
Non-executive Directors did not receive remuneration in relation to their duties for BBC Worldwide.
Defined benefit entitlements
Pension figures are all in £
Tim Davie
1
Martyn Freeman
2
Suzanne Burrows
3
Section
Accrued
pension
31 Mar 16
Accrued
pension
01 Apr 15
Defined
benefit
contributions
(via salary
sacrifice)
48
CAB 2011
9,961
7,530
8,640
51
Old benefits
68,533
67,627
3,570
48
CAB 2006
13,091
12,713
946
Age as at
31 Mar 16
1
Tim Davie joined the BBC in 2005 and was appointed CEO of BBC Worldwide on 1 April 2013. Tim became an active member of the CAB 2011
section as of 1 January 2012 and retains a deferred pension in the New Benefits section for service up to that date. The accrued pensions shown relate
to CAB 2011 only but include the period before he was appointed as a Director.
2
Martyn Freeman joined the BBC in 1994 and served on the Board of BBC Worldwide from 9 November 2015 to 29 January 2016. The accrued
pensions shown include the period before he was appointed as a Director.
3
Suzanne Burrows joined the BBC in 2009 and became a Director of BBC Worldwide on 29 January 2016. The accrued pensions shown include the
period before she was appointed as a Director.
24
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the Group
financial statements in accordance with International IFRSs as adopted by the EU and applicable law and have elected to prepare the Company
financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and parent Company and of their profit or loss for that period. In preparing each of the Group and parent Company financial
statements, the Directors are required to:
•
•
•
•
•
select suitable accounting policies and then apply them consistently;
make judgements and estimates that are reasonable and prudent;
for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU;
for the parent Company financial statements, state whether applicable UK Accounting Standards have been followed, subject to any material
departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue
in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company's transactions and
disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that its financial statements
comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets
of the Group and to prevent and detect fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website.
Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
25
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Consolidated income statement
for the year ended 31 March 2016
Ongoing
businesses and
total
Note
Ongoing
businesses
BBC
AMERICA *
Total
2016
2015
2015
2015
£m
£m
£m
£m
Headline sales including joint ventures
Less: Share of revenue of joint ventures
Revenue
2
1,029.4
(174.0)
855.4
948.1
(150.5)
797.6
53.7
53.7
1,001.8
(150.5)
851.3
Total operating costs
Share of results of joint ventures and associates
Operating profit
3
(790.8)
41.8
106.4
(728.5)
35.8
104.9
(42.3)
11.4
(770.8)
35.8
116.3
2
4
4
4
133.8
(10.6)
(3.4)
(13.4)
106.4
127.2
(9.4)
(8.1)
(4.8)
104.9
11.4
11.4
138.6
(9.4)
(8.1)
(4.8)
116.3
28
8
9
9
1.5
(4.6)
0.9
(3.7)
100.5
(5.7)
0.8
(3.5)
96.5
115.9
127.3
115.9
(5.7)
0.8
(3.5)
223.8
99.0
96.5
11.4
107.9
(14.9)
85.6
(11.7)
84.8
(26.6)
100.7
(38.3)
185.5
85.6
85.6
84.8
84.8
100.7
100.7
185.5
185.5
Analysed as:
Headline profit
Share of interest and tax of joint ventures and associates
Pension deficit reduction payment
Other specific items
Gains on disposals
Other gains and losses
Finance income
Finance expense
Profit before tax
Profit before tax excluding gains and losses on disposals
Tax charge for the year
Profit for the year attributable to the equity shareholder
10
5
Attributable to:
Equity shareholders of the parent company
Non-controlling interests
Profit for the year
Consolidated statement of comprehensive income
for the year ended 31 March 2016
Ongoing
businesses and
total
Profit for the year
Items that are or may be reclassified to profit or loss:
Recycling of translation reserves on disposal of business
Exchange differences on translation of foreign operations
Revaluation of available-for-sale financial assets
Net losses on cash flow hedges
Tax on cash flow hedges taken directly to other comprehensive income
Other comprehensive income for the year
Total comprehensive income for the year attributable to equity shareholder of the parent
company
Ongoing
businesses
BBC
AMERICA *
Total
2016
2015
2015
2015
£m
£m
£m
£m
85.6
84.8
100.7
185.5
7.2
2.9
(12.5)
2.5
0.1
16.4
(10.9)
2.3
7.8
85.7
92.6
6.1
2.8
8.9
109.6
6.1
19.2
(10.9)
2.3
16.7
202.2
* BBC AMERICA: 2015 comprises the results of New Video Channel America LLC ("NVCA") up to the date of disposal, together with the Group's gain on
disposal (see note 28). Whilst the transaction did not meet the criteria of a discontinued operation under IFRS 5 Non-Current Assets Held for Sale and
Discontinued Operations , it was considered to be of sufficient importance as to justify the presentation of a separate column for BBC AMERICA in order to
provide a better understanding of the profit and other comprehensive income.
Post-disposal results are included within Share of results of joint ventures and associates in the Ongoing business columns.
27
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Consolidated cash flow statement
for the year ended 31 March 2016
Cash flows from operating activities
Cash generated from operations
Tax paid
Cash flows from investing activities
Interest received
Dividends received from joint ventures and associates
Dividends received from other investments
Purchases of distribution rights
Purchases of other intangible assets
Purchases of property, plant and equipment
Acquisition of subsidiaries (net of cash acquired)
Disposal of operations net of cash disposed
Acquisition of interests in joint ventures and associates
Acquisition of investments
Amounts advanced to related parties
Repayment by related parties
Cash flows from financing activities
Interest paid
Drawdown of loans and borrowings
Equity dividends paid
2016
2015
Note
£m
£m
29
161.0
(8.7)
152.3
217.5
(26.5)
191.0
0.9
26.6
0.4
(128.5)
(14.5)
(6.5)
(0.9)
31.6
(2.9)
(0.2)
(2.6)
(96.6)
0.8
26.5
(145.9)
(11.7)
(20.3)
64.5
(3.6)
(5.4)
(0.1)
0.3
(94.9)
(3.5)
32.0
(105.5)
(77.0)
(3.3)
36.4
(111.3)
(78.2)
(21.3)
66.6
0.5
17.9
45.1
3.6
45.8
66.6
16
17
13
14
15
27
28
16
11
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Foreign exchange translation gains
Cash and cash equivalents at end of the year
Cash and cash equivalents is comprised entirely of cash at banks and on hand.
29
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Consolidated statement of changes in equity
for the year ended 31 March 2016
Share
capital
£m
Balance at 1 April 2014
Profit for the year
Recycling of translation reserves on disposal
Recognition and transfer of cash flow hedges
Tax on items taken directly to equity
Exchange differences on translation of foreign operations
Total comprehensive income for the year
Dividends paid (note 11)
Balance at 31 March 2015
Profit for the year
Revaluation of available-for-sale financial assets (note 26)
Net gain/(loss) on cash flow hedges
Tax on items taken directly to equity
Exchange differences on translation of foreign operations
Total comprehensive income for the year
Changes in non-controlling interests (notes 26 and 27)
Dividends paid (note 11)
Balance at 31 March 2016
0.2
0.2
0.2
30
Hedging
reserve
Translation
reserve
Other
reserves
Retained
earnings
£m
£m
£m
£m
5.6
(10.9)
2.3
(8.6)
(3.0)
(12.5)
2.5
(10.0)
(13.0)
(13.2)
6.1
19.2
25.3
12.1
7.2
7.2
19.3
2.9
2.9
(1.6)
1.3
322.1
185.5
185.5
(111.3)
396.3
85.6
85.6
(105.5)
376.4
Non-controlling
interests
£m
0.1
0.1
Total
equity
£m
314.7
185.5
6.1
(10.9)
2.3
19.2
202.2
(111.3)
405.6
85.6
2.9
(12.5)
2.5
7.2
85.7
(1.5)
(105.5)
384.3
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements
1. Principal accounting policies
BBC Worldwide Limited (the “Company”) is a company domiciled and incorporated in the United Kingdom, and its registered address is Television
Centre, 101 Wood Lane, London W12 7FA. The consolidated financial statements of the Company for the year ended 31 March 2016 comprise the
Company and its subsidiary undertakings (together the “Group”) and the Group’s interest in joint ventures and associated undertakings.
These financial statements are presented in pounds sterling because that is the currency of the primary economic environment in which the Group
operates. Foreign operations are included in accordance with the policies set out below.
(a) Basis of preparation
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the
European Union (the EU), the Companies Act 2006 and Article 4 of the EU International Accounting Standards Regulations.
The financial statements are principally prepared on the historical cost basis. Areas where alternative bases of accounting are applied are identified in
the accounting policies below.
For the year ended 31 March 2015, the BBC AMERICA column includes in the Income statement and the relevant notes comprises the results of
NVCA up to the date of disposal, together with the Group's gain on disposal (see note 28). Whilst the transaction did not meet the criteria of a
discontinued operation under IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations , it was considered to be of sufficient importance
to justify the presentation of a separate column for BBC AMERICA, in order to provide a better understanding of the profit and other comprehensive
income for the year.
(b) Going concern
The Board remains satisfied with the Group’s funding and liquidity position. The disclosures on page 18 in the Directors’ Report in respect of going
concern form part of the audited accounts.
As at 31 March 2016, the main source of debt funding was an unsecured credit facility with BBC Commercial Holdings Limited (BBCCH) expiring in
September 2017. Further information in respect of this facility is included in note 23.
On the basis of stress-tested forecasts, and having regard to available and anticipated financing facilities, the Board has concluded that the going
concern basis of preparation continues to be appropriate. Further information in respect of liquidity risk is included in note 34.
(c) Basis of consolidation
i.
Subsidiaries
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (and its
subsidiaries) made up to 31 March each year. Control is achieved where the Company has the power to govern the financial and operating policies of
an investee entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of
acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries
to bring the accounting policies used into line with those of the Group. All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
Non-controlling interests in subsidiaries are identified separately from the Group's equity therein. The interests of non-controlling shareholders are
initially measured at their proportionate share of the fair value of the acquiree's identifiable net assets. Subsequent to acquisition, the carrying amount
of non-controlling interests is increased or decreased in proportion to the non-controlling interests' share of any subsequent changes in equity.
Changes in the Group's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amounts
of non-controlling interests are adjusted to reflect any changes in their, and the Group's, relative interests in the subsidiaries. Any difference between
the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity
and attributed to the Company's shareholder.
When the Group loses control of a subsidiary, the profit or loss on disposal is calculated as the difference between: (i) the aggregate of the fair value
of the consideration received and the fair value of any retained interest (net of disposal costs); and (ii) the previous carrying amount of the net assets
of the subsidiary (including attributable goodwill) and any non-controlling interests. Amounts previously recognised in other comprehensive income in
relation to the subsidiary are reclassified to the income statement or transferred directly to retained earnings as appropriate. The fair value of any
interest retained in the former subsidiary at the date when control is lost is regarded as the cost on initial recognition of an investment in a joint
venture or associate.
31
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
1. Principal accounting policies (continued)
(c) Basis of consolidation (continued)
ii.
Joint ventures and associates
A joint venture is a type of joint arrangement whereby the parties that have joint control have rights to the net assets of the joint venture. Joint control
is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous
consent of the parties sharing control. An associate is an entity over which the Group has significant influence. Significant influence is the power to
participate in the financial and operating policy decisions of the investee, but is not control or joint control over those policies.
The results, and assets and liabilities of joint ventures and associates are incorporated into these financial statements using the equity method of
accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets
Held for Sale and Discontinued Operations.
Under the equity method, investments in associates are carried in the consolidated balance sheet at cost, adjusted for post-acquisition changes in the
Group's share of the net assets of the joint venture or associate, less any impairment in the value of individual investments.
Where the Group’s share of losses exceeds the interest in the joint venture or associate, including the carrying value of the investment and any longterm interests, to nil, no further losses are recognised except to the extent that the Group has incurred legal or constructive obligations or made
payments on behalf of the joint venture or associate.
Where a group entity transacts with a joint venture or associate of the Group, unrealised profits and losses are eliminated to the extent of the Group's
interest in the relevant joint venture or associate.
The Group accounts for its share of the results and net assets of its joint ventures and associates using information as of 31 March with the exception
of Children's Character Books Limited, Woodlands Books Limited, Educational Publishers LLP and JV Programmes LLC which have been included
using information from unaudited accounts drawn up to 31 December. The impact of these non-coterminous year ends is not considered material.
(d) Adoption of new and revised standards
At the beginning of the current period, the Group adopted the following accounting pronouncements, none of which had a significant impact on its
results or financial position:
•
•
•
Amendments resulting from Annual Improvements 2010-2012 Cycle (2013)
Amendments resulting from Annual Improvements 2011-2013 Cycle (2013)
Amendments to IAS 19 (2013) Employee Benefits
At the date of authorisation of these financial statements, the following Standards and Interpretations which have not been applied in these financial
statements were in issue but not yet effective (and in some cases had not yet been adopted by the EU):
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Amendments resulting from Annual Improvements 2012-2014 Cycle (2014) (effective for periods commencing on or after 1 January 2016)
Amendments to IAS 1 (2014) Presentation of Financial Statements (effective for periods commencing on or after 1 January 2016)
Amendments to IAS 7 (2016) Statement of Cash Flows (effective for periods commencing on or after 1 January 2017)
Amendments to IAS 12 (2016) Income Taxes (effective for periods commencing on or after 1 January 2017)
Amendments to IAS 16 (2014) Property, Plant and Equipment (effective for periods commencing on or after 1 January 2016)
Amendments to IAS 27 (2014) Separate Financial Statements (effective for periods commencing on or after 1 January 2016)
Amendments to IAS 28 (2014, 2015) Investments in Associates and Joint Ventures (effective for periods commencing on or after 1 January
2016)
Amendments to IAS 38 (2014) Intangible Assets (effective for periods commencing on or after 1 January 2016)
Amendments to IAS 39 (2013) Financial Instruments: Recognition and Measurement (effective when IFRS 9 is applied, on or after 1 January
2018)
Amendments to IAS 41 (2014) Agriculture (effective for periods commencing on or after 1 January 2016)
Amendments to IFRS 7 (2011, 2013) Financial Instruments: Disclosures (effective when IFRS 9 is applied, on or after 1 January 2018)
Amendments to IFRS 10 (2014) Consolidated Financial Statements (effective for periods commencing on or after 1 January 2016)
Amendments to IFRS 11 (2014) Joint Arrangements (effective for periods commencing on or after 1 January 2016)
Amendments to IFRS 12 (2014) Disclosures of Interests in Other Entities (effective for periods commencing on or after 1 January 2016)
IFRS 9 (2014) Financial Instruments (effective for periods commencing on or after 1 January 2018)
IFRS 14 (2014) Regulatory Deferral Accounts (effective for periods commencing on or after 1 January 2016)
IFRS 15 (2014, 2015) Revenue from Contracts with Customers (effective for periods commencing on or after 1 January 2018)
IFRS 16 (2016) Leases (effective for periods commencing on or after 1 January 2019)
32
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
1. Principal accounting policies (continued)
(d) Adoption of new and revised standards (continued)
The Directors do not expect that the adoption of the standards listed above will have a material impact on the financial statements of the Group in
future periods, except for the below which are currently being evaluated:
•
•
•
IFRS 9 (2014) Financial Instruments (effective for periods commencing on or after 1 January 2018)
IFRS 15 (2014, 2015) Revenue from Contracts with Customers (effective for periods commencing on or after 1 January 2018)
IFRS 16 (2015) Leases (effective for periods commencing on or after 1 January 2019)
Beyond the information above, it is not practicable to provide a reasonable estimate of the effect of these standards until a detailed review has been
completed.
(e) Non-statutory financial performance measures
The Group believes that 'Headline sales' and 'Headline profit' are additional non-statutory measures of financial performance that provide further
guidance to help understand the performance of the business on a comparable basis year on year.
Headline sales include the Group's share of the revenues of its joint ventures, which are closely monitored by the Directors. Headline profit excludes
significant items affecting operating profit (termed "specific items") which in the Directors’ judgement enable a more complete understanding of the
Group’s financial performance. Specific items are identified separately by virtue of their size, nature or incidence.
Specific items are not defined under IFRS and may not be comparable to similarly titled measures used by other companies. Items which have been
highlighted for consideration include the impairment of goodwill, the Group's share of the interest and tax of joint ventures and associates, and other
non-routine items which help to facilitate a consistent view of the Group's results.
The Group also discloses profit before tax excluding gains and losses on disposals. This measure reflects the overall profitability of the group on a
statutory basis, before taking into account business disposals.
(f)
Business combinations
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The cost of each acquisition is measured at the
aggregate of the fair values (at the date of exchange) of assets given and liabilities incurred or assumed in exchange for control of the acquiree.
Acquisition related costs are recognised in the income statement as incurred.
Where applicable, the consideration for the acquisition includes contingent consideration, measured at its acquisition-date fair value. Subsequent
changes in the fair value of contingent consideration are recorded in the income statement.
Where a business combination is achieved in stages (i.e. where the Group acquires an entity which was previously a joint venture, associate or heldfor-sale investment) the Group remeasures its pre-existing interest in the entity to fair value at the acquisition date (i.e. the date the Group attains
control). The resulting gain or loss, if any, is recognised in the income statement. Amounts previously recognised in other comprehensive income in
respect of the entity, prior to the acquisition date, are also reclassified to the income statement where required.
The acquired entity’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 (2008) Business
Combinations are recognised at their fair value at the acquisition date, except that assets (or disposal groups) that are classified as held for sale are
measured in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations.
(g) Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through sale rather than
continuing use, they are available for immediate sale in their present condition and a sale is highly probable. Management must be committed to the
sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification.
When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as
held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary
after the sale.
Once classified as held for sale, non-current assets and disposal groups are measured at the lower of carrying amount and fair value less costs to
sell. No amortisation or depreciation is charged on non-current assets (including those in disposal groups) classified as held for sale.
33
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
1. Principal accounting policies (continued)
(h) Goodwill
Goodwill arising on acquisition (except prior to 1 April 2007) is recognised as an asset at the date that control is acquired (the 'acquisition date').
Goodwill is measured as the difference between: (i) the consideration paid, the fair value of any interest held in the acquiree prior to acquisition, and
any non-controlling interest in the acquiree; and (ii) the fair value of the identifiable assets acquired and liabilities assumed at the acquisition date.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the
Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated
are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. Testing for impairment involves a
comparison of the carrying amount of the cash-generating unit with its recoverable amount, being the higher of its value in use or fair value less costs
to sell.
Where impairment testing indicates that the carrying amount of a cash-generating unit exceeds its recoverable amount, the unit is written down to the
recoverable amount. An impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other
assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in
a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
(i)
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided
in the normal course of business, net of discounts, returns, VAT and other sales-related taxes. Revenue is recognised when the significant transfer of
risks and rewards has occurred.
The Group’s main sources of revenue and its policies for the recognition of such revenue are summarised as follows:
•
•
•
•
•
(j)
Licence fees are earned by the Group from programme content and programme formats. Once a contract has been signed, licence fees are
recognised on the later of the start of the licence period or when the associated programme is available for delivery.
Subscription fees from the broadcast of the Group's channels on pay television platforms, and from subscriptions to print and online publications
and services, are recognised as earned, pro rata over the subscription period.
Advertising revenue generated by channels operations and from websites are recognised on transmission or publication of the advertisement.
Production fees and participation royalties earned by the Group are recognised as earned. Production fees are recognised on delivery of the
programme or on a stage of completion basis, depending on the nature of the contract with the customer. Royalties are recognised on receipt or
on an accruals basis where sufficient reliable information is available.
Revenue generated from the sale of physical and digital products through our consumer products operations is recognised at the time of
delivery. Revenue from the sale of goods is stated net of deductions for actual and expected returns based on management judgement and
historical experience.
Foreign currencies
The individual results and financial position of each group company are presented in the currency of the primary economic environment in which the
company operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group
company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated
financial statements.
Transactions in foreign currencies are translated into the applicable functional currency of each entity of the Group at a monthly average exchange
rate. Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rate ruling on that date. Foreign
exchange differences which arise on translation are recognised in the income statement.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange
rates prevailing on the balance sheet date (the 'closing rate'). Income and expense items are translated at the weighted average rates for the year.
Exchange differences arising on the retranslation of the opening net assets, and income and expense for the year to the closing rate are recognised
in other comprehensive income and accumulated in equity (attributed to non-controlling interests as appropriate).
On the disposal of a foreign operation, the cumulative exchange differences in respect of that operation recognised in equity are reclassified to the
income statement and included in the calculation of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign entity and
translated at the closing rate, as described above.
34
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
1. Principal accounting policies (continued)
(k) Retirement benefit costs
Contributions to defined contribution pension schemes are charged to the income statement as they fall due.
Employees of the Group also participate in defined benefit schemes operated by the Group’s ultimate parent, the British Broadcasting Corporation
(the “BBC”). The defined benefit schemes provide benefits based on pensionable pay. The assets of the BBC’s main pension scheme, the BBC
Pension Scheme, are held separately from those of the BBC Group.
The BBC Pension Scheme is a Group wide scheme and there is no contractual agreement or stated policy for charging the net defined benefit cost to
scheme participants. The contribution rates are set by the pension scheme trustees based on valuations which take a longer-term view of the assets
required to fund the scheme’s liabilities. Valuations of the scheme are performed by Towers Watson, consulting actuaries, with formal valuations
undertaken at least every three years. Therefore as required by IAS 19 Employee Benefits BBC Worldwide accounts for the contributions payable to
the scheme for the year.
(l)
Taxation
Current tax is based on taxable profit for the year, and is calculated using tax rates that have been enacted or substantively enacted at the balance
sheet date. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expenditure which are not
taxable or deductible or which are taxable or deductible in other years.
Current tax assets and current tax liabilities are offset if, and only if, there is a legally enforceable right to set off the recognised amounts; and the
entity intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Deferred tax is the tax expected to be payable or recoverable in future periods and is recognised using the balance sheet liability method. This
method provides for temporary differences between the carrying amounts of assets and liabilities in the balance sheet and the corresponding tax
bases used in the computation of taxable profit. Temporary differences arising from goodwill and the initial recognition of assets or liabilities that affect
neither accounting profit nor taxable profit are not provided for.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, joint ventures and associates except
where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
The carrying value of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be recovered.
The amount of deferred tax provided is based on the manner in which tax is expected to arise and using tax rates that have been enacted or
substantively enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except where it relates to items
recorded within other comprehensive income, in which case the deferred tax is also recorded within other comprehensive income.
Deferred tax assets and deferred tax liabilities are offset only where there is a legally enforceable right to set off current tax assets against current tax
liabilities; and the deferred tax assets and the deferred tax liabilities relate to income taxes levied by the same taxation authority on either:
• the same taxable entity; or
• different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities
simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
(m) Distribution rights
Distribution rights represent rights to programmes and associated intellectual property acquired with the primary intention of exploiting the rights
commercially as part of the Group’s long-term operations.
Distribution rights acquired by the Group are either purchased, generated internally or licensed following the payment of an advance on royalties.
Where the Group controls the respective assets and the risks and rewards attached to them, rights are initially recognised at acquisition cost or
production cost. The carrying amount is stated at cost less accumulated amortisation and provision for impairment.
Amortisation of distribution rights is charged to the income statement to match the average revenue profile of the programme genre over its estimated
average marketable life. The expected lives of distribution rights range from one to ten years, with some older assets for which the Group holds rights
in perpetuity retaining a residual value. In the case of royalty advances, amortisation is charged as the advances are recouped.
Where the carrying value of any individual set of rights exceeds management's best estimate of future exploitation revenues, a provision for
impairment is recorded in the income statement immediately.
For self-produced content, distribution rights exclude co-production costs borne by third parties. These costs are deferred within current assets and
expensed upon recognition of the associated production income. Production income is recognised in accordance with the Group's revenue
recognition policies.
35
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
1. Principal accounting policies (continued)
(n) Other intangible assets
i.
Acquired intangibles
Intangible assets acquired as part of a business acquisition are capitalised at fair value at the date of acquisition. The fair value of such intangible
assets is valued by reference to external market values or income-based methods. Income-based methods estimate the future economic benefits to
be derived from ownership of the asset by identifying, quantifying and separating cash flows attributable to the asset and capitalising their present
value. Purchased intangible assets acquired separately are capitalised at cost. After initial recognition, all intangible fixed assets are measured at cost
less accumulated amortisation and any accumulated impairment losses.
ii.
Internally-generated intangible assets: development expenditure
An internally-generated intangible asset arising from the Group’s development, including software and website development, is recognised when the
asset is technically and commercially feasible, sufficient resources exist to complete the development and it is probable that the asset will generate
future economic benefits. Any expenditure on research or development activities that does not meet the aforementioned criteria is recognised as an
expense in the period in which it is incurred.
iii.
Amortisation
Intangible assets with finite lives are amortised over their useful lives using the straight-line method. Amortisation expense is recorded within total
operating costs in the income statement. The useful lives used for intangible assets are as follows:
•
•
•
Carrier agreements
Software (including internally-generated software)
Other
Unexpired term of agreement
1-5 years
3-8 years
Useful lives are reviewed every year and adjustments are made, where applicable, on a prospective basis.
(o) Property, plant and equipment ("PPE")
Owned PPE is stated at cost less accumulated depreciation and any accumulated impairment losses, other than those items that are classified as
held for sale.
Freehold land is not depreciated. Depreciation is charged on other PPE so as to write off the cost of assets to their residual value, over their expected
useful lives, using the straight-line method. When an item of PPE comprises major components having different useful economic lives, the
components are accounted for as separate items of PPE. Depreciation commences from the date when the asset is available for use.
The useful lives for depreciation purposes for the principal categories of assets are:
•
•
•
Short leasehold buildings
Plant and machinery
Fixtures and fittings
Unexpired lease term
3 to 8 years
3 to 10 years
Assets held under finances leases are treated as PPE and depreciated over the shorter of the lease term or their useful economic life.
The Group capitalises borrowing costs with respect to amounts incurred during the construction of qualifying property, plant and equipment.
(p) Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets (including distribution rights) to determine
whether there is any indication that those assets have suffered an impairment loss. If such indication exists, an impairment loss is recognised in the
income statement for the amount by which an asset’s carrying amount exceeds its recoverable amount. Where an asset does not generate cash
flows that are independent of other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is calculated as the higher of an asset’s value in use and its fair value less costs to sell. Value in use is based on estimated
future cash flows discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
Impairment losses recognised in respect of cash generating units are allocated first to reduce the carrying amount of goodwill allocated to those units,
and any balance to reduce the carrying amount of other assets in the unit on a pro-rata basis. An impairment loss is reversed if there has been a
change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that an asset’s carrying amount
does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, had no impairment loss been recognised.
36
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
1. Principal accounting policies (continued)
(q) Programme rights and other inventories
Programme rights in this context refers to programme rights acquired for the primary purpose of broadcasting through the regional channels
operations. The carrying amount is stated at cost less accumulated amortisation and provision for impairment. The Group’s estimate of the benefits
received from these rights is determined to be most appropriately aligned with a straight-line amortisation profile for the majority of the programme
inventory held. The cost is recognised in the income statement on a straight-line basis over the period of the licence, which is usually three years.
Programmes in the course of production represent the costs incurred by the Group on the creation of new content, which are ordinarily recovered
through co-production agreements or through contracts for the provision of production services. Some production costs are borne by the Group with a
view to exploiting the resulting content through licensing agreements; these are presented within Distribution rights.
Other inventories, comprising CDs, DVDs, raw materials and work in progress, are stated at the lower of cost (determined on a standard or average
cost basis) and net realisable value.
(r)
Financial instruments
Financial assets and financial liabilities are recognised in the Consolidated balance sheet when the Group becomes a party to the contractual
provisions of the instrument.
Financial assets and liabilities are initially measured at fair value less any directly attributable transaction costs, except for those financial assets
classified as at fair value through profit or loss, which are initially measured at fair value.
Financial assets are derecognised from the balance sheet when the Group’s contractual rights to the cash flows expire or the Group transfers
substantially all the risks and rewards of the financial asset. Financial liabilities are derecognised from the Group’s balance sheet when the obligation
specified in the contract is discharged, cancelled or expires.
i.
Classification and Measurement
Financial assets and liabilities are classified into the following categories specified by IAS 39 Financial Instruments: Recognition and Measurement .
•
Loans and receivables - trade receivables, loans and other receivables with fixed or determinable payments that are not quoted in an active
market. These are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by
applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.
•
Available for sale financial assets - are either shares stated at fair value that are traded in an active market or for which a fair value can
otherwise be reliably measured, or stated at cost where an equity instrument is not reliably measurable. Gains and losses arising from changes
in fair value are recognised in other comprehensive income with the exception of impairment losses, interest calculated using the effective
interest method and foreign exchange gains and losses on monetary assets, which are recognised directly in the income statement.
•
Held to maturity investments - the Group does not currently carry any financial instruments classified as held to maturity. Such instruments might
include bills of exchange and debentures with fixed or determinable payments and fixed maturity dates and would be measured at amortised
cost using the effective interest method less any impairment.
•
Financial assets/liabilities at fair value through profit or loss ("FVTPL") - assets and liabilities which are held for trading. An asset or liability is
classified as held for trading if: (i) it has been acquired principally for the purpose of selling or repurchasing in the near term; or (ii) on initial
recognition it is a part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of shortterm profit-taking; or (iii) it is a derivative that is not designated and effective as a hedging instrument. Financial assets and liabilities at FVTPL
are stated at fair value, with any gains and losses arising on remeasurement recognised in the income statement.
•
Other financial liabilities - financial liabilities, including trade payables and borrowings, which are not classified as financial liabilities at FVTPL
are measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.
ii.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument or financial liability and of allocating interest income
or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash flows over the expected life of
the instrument to the net carrying amount on initial recognition.
iii.
Impairment of financial assets
Financial assets, other than those held at FVTPL, are assessed for indicators of impairment at each balance sheet date. Financial assets are
impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the
estimated future cash flows of the investment have been affected.
For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are, in addition,
assessed for impairment on a collective basis. Objective evidence of impairment of a portfolio of receivables could include the Group's past
experience of collecting payments or an increase in the number of delayed payments.
The carrying amount of a financial asset is reduced directly by any impairment loss, for all financial assets except trade receivables where the
carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the
allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying
amount of the allowance account are recognised in the Consolidated income statement.
37
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
1. Principal accounting policies (continued)
(r)
Financial instruments (continued)
iv.
Derivative financial instruments
The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange risk, including foreign
exchange forward contracts and interest rate swaps.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into, and are subsequently remeasured to their fair value at
each subsequent balance sheet date. Changes in fair value are recognised immediately in the Consolidated income statement, except where a
derivative is designated in an effective hedging relationship, as described below.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial
liability. Derivatives are presented as non-current assets or liabilities if the date of maturity of the instrument is more than twelve months after the
balance sheet date. Other derivatives are presented as current assets or current liabilities.
v.
Embedded Derivatives
Derivatives which are embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and
characteristics are not closely related to those of the host contracts, and the host contracts are not carried at fair value. Embedded derivatives are
carried in the Consolidated balance sheet at fair value from inception of the host contract. Unrealised changes in fair value are recognised as gains or
losses within the Consolidated income statement during the period in which they arise.
vi.
Hedge accounting
The Group designates certain derivatives as cash flow hedges by documenting the relationship between the hedging instrument and the hedged item
along with the risk management objectives and its strategy for undertaking various hedge transactions. Where the hedge is deemed to have been
effective, the effective portion of any changes in the fair value of the derivatives that are designated in the hedge are recognised in other
comprehensive income. Any ineffective portion is recognised immediately in the Consolidated income statement.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to the Consolidated income statement in
the periods in which the hedged items are recognised in the Consolidated income statement, in the same line of the Consolidated income statement
as the recognised hedged item. However when the forecast transaction that is hedged results in the recognition of a non-financial asset or a nonfinancial liability, the gains and losses previously accumulated in equity are transferred from equity and included in the initial measurement of the cost
of the non-financial asset or non-financial liability.
Hedge accounting is discontinued when the Group de-designates the hedging relationship, when the hedging instrument expires or is sold,
terminated, or exercised, or when the relationship no longer qualifies for hedge accounting. Any gain or loss recognised in other comprehensive
income upon discontinuation of hedge accounting is either recognised in the Consolidated income statement at the same time as the forecast
transaction affects profit or loss, or is recognised in the Consolidated income statement immediately if the forecast transaction is no longer expected
to occur.
(s) Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation arising from past events and it is
probable that an outflow of economic benefits will be required to settle the obligation. Provisions, other than those for deferred tax, that are payable
over a number of years are discounted to net present value at the balance sheet date using a discount rate appropriate to the particular provision
concerned.
(t)
Leases
Leases are classified as finance leases whenever the terms of the lease are such that the lessee assumes substantially all the risks and rewards of
ownership. All other leases are classified as operating leases.
Assets held under finance leases are capitalised and depreciation is charged accordingly. Such assets are initially recognised at their fair value or, if
lower, at the present value of the minimum lease payments at inception of the lease. The corresponding liability to the lessor is recorded as a finance
lease obligation. Lease payments are apportioned between finance charges and reductions of the lease obligation so as to achieve a constant rate of
interest on the remaining balance of the liability.
Lease income or expense arising from operating leases is recorded in the income statement on a straight-line basis over the term of the lease, with
any associated lease incentives being recorded on a straight-line basis over the lease term as a reduction in the rental income or expense.
38
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
1. Principal accounting policies (continued)
(u) Critical accounting estimates and key judgements
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting assumptions, and requires management
to exercise its judgement and to make estimates in the process of applying the Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed below.
i.
Basis of consolidation
Judgement is required in determining whether certain entities in which the Group has an economic interest should be considered to be subsidiaries,
associates or joint ventures. In such circumstances, the Group has assessed its ability to control or influence those entities. The Group controls an
investee if, and only if, the Group has power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the
investee), exposure, or rights, to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect its
returns; in these cases the investee is treated as a subsidiary. Where such policies are reserved such that an economic partner has the power to veto
key strategic financial and operating decisions, the entity is considered to be a joint venture or associated undertaking.
ii.
Carrying value of goodwill
The determination of whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been
allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash-generating unit and a
suitable discount rate that reflects current market assessments of the risks specific to the asset and the time value of money, in order to calculate
present value. Further information about assumptions used in determining the carrying value of goodwill can be found in note 12.
iii.
Revenue recognition
The timing of revenue recognition requires judgement, as does the amount to be recognised. This may involve estimating the fair value of
consideration before it is received. In making these judgements, the Group considers the detailed criteria for the recognition of revenue set out in
IAS 18 Revenue and, in particular, whether the Group has transferred the significant risks and rewards of the goods or services to the customer.
iv.
Distribution rights and programme rights
The assessment of the appropriate profile over which to recognise the amortisation of distribution rights and programme rights involves a certain
degree of judgement. For distribution rights, amortisation is charged to the income statement to match the average revenue profile of the programme
genre over its estimated average marketable life. Programme rights are amortised over the licence period.
v.
Fair value of financial instruments
Certain financial instruments are carried on the balance sheet at fair value, with changes in fair value reflected in the income statement. Fair values
are estimated by reference in part to published price quotations and in part by using valuation techniques. Further information about fair value
measurements is provided in note 34.
vi.
Accounting treatment and valuation of NVCA as an associate
As described in note 28, in October 2014 the Group sold a 49.9% interest in its former subsidiary NVCA to AMC Networks Inc ("AMCN"). Despite the
BBC Worldwide residual 50.1% shareholding in NVCA, AMCN obtained control over the key decision-making activities of NVCA. NVCA was therefore
deconsolidated from the date of disposal and since that date, due to the significant influence retained by the Group, NVCA has been equityaccounted for as an associate. The carrying value initially ascribed to NVCA as an associate was based on the Board's assessment of the fair value
of NVCA at the date of disposal, taking into account the proceeds received for the sale of the controlling interest, the significant influence retained by
the Group, and the retained right to variable returns from the investment in NVCA. The carrying value of NVCA as at 31 March 2016 and 31 March
2015, including the Group's share of equity earnings arising since NVCA's reclassification as an associate, is a key judgement area for the Board, to
ensure that there are no indicators of impairment in the value of NVCA which might require a write-down of the Group's investment.
39
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
2.
Segment information
Whilst not required by IFRS 8 Operating Segments to present segmental information, such information has been provided below as it is considered
meaningful to the users of the accounts.
An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses. The results
of all operating segments are reviewed regularly by the BBC Worldwide Board (the 'Board') which has been identified as the Group’s chief operating
decision maker in accordance with IFRS 8.
Management has determined the reportable segments based upon reports reviewed by the Board. All segments reported meet the quantitative
thresholds required by IFRS 8. The reportable segments are:
•
•
•
•
•
United Kingdom
North America
Australia and New Zealand
Western Europe
Rest of World
Segment information as presented is consistent with the Group's internal reporting to the Board.
The Board assesses the performance of reportable segments based on Headline sales and Headline profit, as defined in note 1. Inter-segment sales are
conducted on an arm’s length basis. Specific items and net financing costs are not allocated to segments. In prior years, non-trading foreign exchange
gains and losses were included within the segmental results; however, for the year ended 31 March 2016, these movements have not been allocated and
have instead been included in the eliminations column. Prior year's results have not been restated as the effect of this was immaterial.
Information regarding the assets and liabilities of reportable segments is not reported to the Board.
2016
Headline sales
Share of revenue of joint ventures
Revenue
Headline profit
Specific items
Operating profit
Gains on disposals
Other gains and losses
Finance income
Finance expense
Profit before tax
2015
Headline sales
Share of revenue of joint ventures
Revenue
Headline profit
Specific items
Operating profit
Gains on disposals
Other gains and losses
Finance income
Finance expense
Profit before tax
United Kingdom
North America
Australia and
New Zealand
Western Europe
Rest of World
Eliminations
Total
£m
£m
£m
£m
£m
£m
£m
379.3
(168.6)
210.7
277.9
(0.8)
277.1
79.1
(0.5)
78.6
168.0
(4.1)
163.9
(12.6)
(12.6)
1,029.4
(174.0)
855.4
62.4
24.2
19.2
21.0
137.7
137.7
5.4
1.6
133.8
(27.4)
106.4
1.5
(4.6)
0.9
(3.7)
100.5
United Kingdom
North America
Australia and
New Zealand
Western Europe
Rest of World
Eliminations
Total
£m
£m
£m
£m
£m
£m
£m
361.8
(148.9)
212.9
299.9
(0.8)
299.1
81.9
(0.8)
81.1
160.1
160.1
116.2
116.2
(18.1)
(18.1)
1,001.8
(150.5)
851.3
52.7
32.9
16.3
27.0
5.2
The allocation of revenue to geographic segments is based upon the business region in which the sales are generated.
Inter-regional revenues are eliminated upon consolidation and are reflected in the ‘Eliminations’ column above.
40
4.5
138.6
(22.3)
116.3
115.9
(5.7)
0.8
(3.5)
223.8
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
2.
Segment information (continued)
Whilst, as noted above, the Board now manages the group by region rather than by business classification, the additional data set out below presents the
headline sales by business classification, in order to provide an understanding of the size of each of the major business lines. Inter-segment sales are
conducted on an arm’s length basis. Specific items, non-trading gains and losses, and net financing costs are not allocated to segments.
The business classifications reported below have been updated during the current year to better reflect the Board’s operational view of the business. The
Board views the business based on four business line segments: Branded services (includes prior year's Channels business, as well as Ad sales and
BBC Store), Content sales (includes prior year's Sales and distribution), Production and formats, and Consumer products. The previously reported Other
business lines have been reallocated across these four segments.
Branded services
Content sales
Production and
formats
Consumer
products
Eliminations
Total
£m
£m
£m
£m
£m
£m
335.7
(164.7)
171.0
384.2
(0.7)
383.5
173.0
(4.1)
168.9
179.1
(4.5)
174.6
(42.6)
(42.6)
1,029.4
(174.0)
855.4
49.7
68.2
10.6
(1.6)
133.8
(27.4)
106.4
1.5
(4.6)
0.9
(3.7)
100.5
2016
Headline sales
Share of revenue of joint ventures
Revenue
Headline profit/(loss)
Specific items
Operating profit
Gains and losses on disposals
Other gains and losses
Finance income
Finance expense
Profit before tax
6.9
Branded services
Content sales
Production and
formats
Consumer
products
Eliminations
Total
£m
£m
£m
£m
£m
£m
370.5
(144.0)
226.5
324.4
(0.7)
323.7
163.0
163.0
197.6
(5.8)
191.8
(53.7)
(53.7)
1,001.8
(150.5)
851.3
55.4
62.7
15.8
2015
Headline sales
Share of revenue of joint ventures
Revenue
Headline profit
Specific items
Operating profit
Gains and losses on disposals
Other gains and losses
Finance income
Finance expense
Profit before tax
3.4
1.3
138.6
(22.3)
116.3
115.9
(5.7)
0.8
(3.5)
223.8
Inter-segment revenues are eliminated upon consolidation and are reflected in the ‘Eliminations’ column above.
The Group's geographical reportable segments reflect management reporting lines and do not solely correspond to the country or region after which they
are named. The Group’s revenue by country of destination was as follows:
Headline
sales
United Kingdom
United States of America
Australia
Rest of World
Share of JV
revenue
Revenue
Headline
sales
Share of JV
revenue
Revenue
2016
2016
2016
2015
2015
2015
£m
£m
£m
£m
£m
£m
369.1
267.9
69.1
323.3
1,029.4
(168.6)
(0.8)
(0.5)
(4.1)
(174.0)
200.5
267.1
68.6
319.2
855.4
339.2
278.5
72.4
311.7
1,001.8
(145.1)
(0.8)
(0.6)
(4.0)
(150.5)
194.1
277.7
71.8
307.7
851.3
The Group’s non-current assets, other than financial instruments and deferred tax assets, located in the UK are £353.4m (2015: £304.4m) and located
outside of the UK are £201.1m (2015: £177.3m).
Further analysis of the Group's revenues by product or service line is not provided as this information is not routinely reported to the Board.
41
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
3.
Total operating costs
Operating costs from continuing operations comprise the following categories of expense:
Ongoing
businesses and
total
Cost of sales
Distribution costs
Administration costs
Total operating costs
4.
Ongoing
businesses
BBC America
Total
2016
2015
2015
2015
£m
£m
£m
£m
572.7
70.8
147.3
790.8
499.0
78.9
150.6
728.5
29.0
4.6
8.7
42.3
528.0
83.5
159.3
770.8
Specific items
Share of interest and tax of joint ventures and associates
The Group views its investments as being a fundamental part of its ongoing operations. IFRS requires that the Group reports its share of the results of
joint ventures and associates on an after-tax, after-interest basis. The interest and tax charges borne by joint ventures and associates have been added
back within Headline profit as a specific item, in order to present an operating profit measure which more appropriately represents the way in which the
business is reviewed and assessed internally.
Pension deficit reduction payment
As described in note 32, the Group accounts for contributions to the BBC Pension Scheme as if it were a defined contribution scheme. During the year
the Group incurred costs of £3.4m (2015: £8.1m) in relation to additional tax-deductible cash payments to the BBC in connection with the BBC's deficit
reduction plan. As this payment is not reflective of the ongoing service cost of active scheme participants, management believes it is appropriate to
present this cost as a specific item. Further payments are expected to be made in future years as described in note 32.
Other specific items
Ongoing
businesses and
total
Reorganisation costs
Amounts written back/(off) interests in joint ventures and associates
Impairment of other investments
Transaction fees
Ongoing
businesses and
total
2016
2015
£m
£m
(12.8)
0.6
(0.5)
(0.7)
(13.4)
(2.6)
(2.0)
(0.2)
(4.8)
Reorganisation costs in both years are tax-deductible and settled in cash, and include redundancy, business exit and other restucturing costs arising as a
result of changes to the Group's organisation structure, and, in the year ended 31 March 2015, costs associated with the relocation of the Group's head
office.
Amounts written back to joint ventures and associates in the year ended 31 March 2016 relate to a reversal of an impairment loss recognised in the prior
year. Amounts written off interests in joint ventures and associates in the prior year were derived from a comparison of their respective book values with
discounted cash flow forecasts. Such write-offs are non-cash and non-deductible for tax purposes.
42
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
5.
Profit for the year
Profit for the year is stated after charging/(crediting):
Ongoing
businesses and
total
Rentals on operating leases and similar arrangements
Sub-lease rentals received on operating leases
Net foreign exchange losses/(gains)
Government grants receivable
Depreciation on property, plant and equipment (note 15)
Impairment of property, plant and equipment (note 15)
Amortisation of intangible assets:
Distribution rights (note 13)
Internally generated software assets (note 14)
Other intangible assets (note 14)
Programme rights and other inventories:
Cost recognised as an expense:
- programmes in the course of production
- broadcast rights and other inventories
Write-downs recognised as an expense
Employee costs (note 7)
Impairment loss recognised on trade receivables (note 19)
Reversal of impairment losses recognised on trade receivables (note 19)
Ongoing
businesses
BBC America
Total
2016
2015
2015
2015
£m
£m
£m
£m
9.9
(0.6)
1.4
(0.1)
6.0
-
13.7
(0.2)
(0.5)
(0.1)
7.8
-
0.4
0.2
0.9
14.1
(0.2)
(0.5)
(0.1)
8.0
0.9
121.0
5.6
1.9
113.0
3.4
1.0
109.0
48.5
9.1
139.9
2.6
(1.1)
83.0
48.8
3.8
142.8
1.0
(2.8)
-
0.5
14.6
0.6
6.1
0.1
-
113.0
3.4
1.0
83.5
63.4
4.4
148.9
1.1
(2.8)
Amortisation of distribution rights is recorded within cost of sales. Amortisation of other intangible assets, including internally generated software assets,
is recorded within administration costs.
6.
Auditor's remuneration
Ongoing
businesses and
total
Ongoing
businesses
BBC America
Total
2016
2015
2015
2015
£m
£m
£m
£m
Fees payable to the Company's auditors for the audit of the Company's
annual accounts
0.4
0.4
0.1
0.5
Fees payable to the Company's auditors and their associates for other
services to the Group
The audit of the Company's subsidiaries pursuant to legislation
Total audit fees
0.2
0.6
0.2
0.6
0.1
0.2
0.7
Tax services
Other services
Total non-audit fees
0.1
0.1
0.2
0.2
0.1
0.3
-
0.2
0.1
0.3
43
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
7.
Employee numbers and costs
The average number of employees during the year was as follows:
Ongoing
businesses and
total
United Kingdom
North America
Australia and New Zealand
Western Europe
Rest of World
Total number of employees
Ongoing
businesses
BBC America
Total
2016
2015
2015
2015
Number
Number
Number
Number
460
360
179
315
450
1,764
438
360
197
324
424
1,743
86
86
438
446
197
324
424
1,829
Within the averages above, 108 (2015: 93) part-time employees have been included at their full-time equivalent of 73 (2015: 66), including casual staff.
The aggregate remuneration recognised in the Consolidated income statement in respect of these employees, including casual staff, comprised:
Ongoing
businesses and
total
Salaries and wages
Social security costs
Other pension costs
Ongoing
businesses
BBC America
Total
2016
2015
2015
2015
£m
£m
£m
£m
115.3
11.0
13.6
139.9
114.4
10.4
18.0
142.8
5.6
0.3
0.2
6.1
120.0
10.7
18.2
148.9
In addition to the above, redundancy costs totalling £5.2m (2015: £1.3m) were incurred in the year.
The remuneration of the Directors during the year was as follows:
Ongoing
businesses and
total
Emoluments
Long-term incentive schemes
Ongoing
businesses and
total
2016
2015
£'000
£'000
927
927
1,040
29
1,069
The number of Directors to whom retirement benefits have accrued throughout the year under the following schemes is as follows:
Defined benefit schemes
Money purchase schemes
Ongoing
businesses and
total
Ongoing
businesses and
total
2016
Number of
Directors
2015
Number of
Directors
3
1
Further details of Directors’ remuneration are provided in the Report on Directors' remuneration on pages 20 to 24. Further information regarding the
compensation earned by key management can be found in note 35.
The Group contributed £14,000 (2015: £23,000) to money purchase schemes for its Directors in the year.
The remuneration of the highest paid Director during the year was £626,000 (2015: £603,000).
44
1
1
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
8.
Other gains and losses
Ongoing
businesses and
total
Change in fair value of derivative financial instruments
Increase in earn-out payments due in respect of prior acquisitions
Reduction in earn-out proceeds receivable on prior disposals
9.
Ongoing
businesses and
total
2016
2015
£m
£m
(3.4)
(1.2)
(4.6)
(4.0)
(1.3)
(0.4)
(5.7)
Ongoing
businesses and
total
Ongoing
businesses and
total
Net financing costs
2016
2015
£m
£m
Interest receivable
Finance income
0.9
0.9
0.8
0.8
Interest payable on loan from parent undertaking
Interest payable on derivative financial instruments
Other interest payable
Finance expense
2.2
0.9
0.6
3.7
1.8
1.2
0.5
3.5
45
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
10. Taxation
Tax charge for the year
Ongoing
businesses and
total
Current tax:
UK corporation tax
Foreign tax
Adjustments in respect of prior years
Deferred tax:
Origination and reversal of temporary differences
Reduction in rate of UK corporation tax
Adjustments in respect of prior years
Tax on profit on ordinary activities
Ongoing
businesses
BBC America
Total
2016
2015
2015
2015
£m
£m
£m
£m
4.7
14.0
(3.5)
15.2
13.5
(3.4)
10.1
5.7
3.3
9.0
5.7
16.8
(3.4)
19.1
0.3
0.2
(0.8)
(0.3)
0.9
0.1
0.6
1.6
17.6
17.6
18.5
0.1
0.6
19.2
14.9
11.7
26.6
38.3
The UK corporation tax charge is net of a credit of £0.9m (2015: £7.8m) in respect of High-end television tax relief.
The tax charge for the year includes tax deductions of £3.4m (2015: £2.2m) in respect of specific items (note 4).
In addition to the amount charged to the Consolidated income statement, a tax credit of £2.5m (2015: charge of £2.3m) has been recognised in other
comprehensive income in respect of financial instruments treated as cash flow hedges.
Reconciliation of tax expense
The total tax charge for the year is lower (2015: lower) than the standard rate of corporation tax in the UK of 20% (2015: 21%). The tax charge can be
reconciled to the profit per the Consolidated income statement as follows:
Ongoing
businesses and
total
Ongoing
businesses
BBC America
Total
2016
2015
2015
2015
£m
£m
£m
£m
100.5
96.5
127.3
223.8
Tax at the UK corporation tax rate of 20% (2015: 21%)
20.1
20.3
26.7
47.0
Effects of:
Disallowed expenditure
Non-taxable income
High-end television tax relief
Tax differential on wholly-owned overseas earnings
Tax effect of share of results of joint ventures and associates
Reduction in rate of UK corporation tax
Adjustments in respect of previous years
1.0
(0.3)
(0.9)
5.4
(6.3)
0.2
(4.3)
1.7
(7.8)
6.3
(6.1)
0.1
(2.8)
1.5
(11.3)
9.7
-
3.2
(11.3)
(7.8)
16.0
(6.1)
0.1
(2.8)
Tax charge for the year
14.9
11.7
26.6
38.3
Profit before tax
46
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
10. Taxation (continued)
The amount of tax paid in the year is different from the tax charge, due mainly to the timings of payments. UK corporation tax is payable in four
instalments, two of which are made after the end of the year in which the tax arises, i.e. some of the tax included in the 2014/15 tax charge was paid
in 2015/16. The payments are based on the best estimate of the tax charge at the time the payment is made. The final tax liability is determined when
the tax return for the year is prepared and submitted to HMRC some time after the year end. In addition, the tax charge in the accounts is a best
estimate at the time the accounts are prepared. The charge is then adjusted in later years to reflect the actual tax liability arising from the submitted
tax returns.
Factors affecting future tax expense
The UK corporation tax rate reduced from 21% to 20% on 1 April 2015.
On 26 October 2015 The Summer Finance Bill 2015, which reduces the main rate of corporation tax to 19% from April 2017 and 18% from April 2020
were substantively enacted. As these reductions to the rate were substantively enacted at the balance sheet date, the deferred tax assets have been
calculated at 18% in line with when the company anticipates temporary differences to unwind.
The Chancellor announced his Budget 2016 on 16th March 2016 including the publication of the Business Tax Road Map, which sets out a further
reduction in the main rate of corporation tax from 18% to 17% from 1 April 2020, and measures relating to the OECD Base Erosion and Profit Shifting
Actions,. These include limiting the utilisation of brought forward losses and interest deductions, to be effective from 1 April 2017. Whilst a full
analysis cannot be presently carried out until final legislation is published, it is expected that these measures will have limited impact on these current
year financial statements.
Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Group, and the movement thereon, during the current and prior year:
JVs & Associates Programme rights
At 1 April 2014
(Charged)/credited to the income statement
Credited to other comprehensive income
Foreign exchange translation gains and losses
At 31 March 2015
Credited/(charged) to the income statement
Credited to other comprehensive income
Foreign exchange translation gains and losses
At 31 March 2016
Fixed asset
temporary
differences
Provisions
Financial
instruments
Other
Total
£m
£m
£m
£m
£m
£m
£m
1.3
(28.1)
(26.8)
13.1
(2.0)
(15.7)
(5.7)
(0.8)
0.4
(6.1)
(0.2)
(6.3)
3.6
(0.3)
3.3
(0.6)
(0.1)
2.6
4.1
1.5
1.1
6.7
(3.4)
0.3
3.6
(1.9)
0.8
2.3
1.2
0.1
2.5
3.8
(0.1)
7.7
(0.9)
6.7
(8.9)
1.0
(1.2)
1.3
(19.2)
2.3
0.6
(15.0)
0.3
2.5
(1.0)
(13.2)
2016
2015
£m
£m
6.5
(19.7)
(13.2)
4.2
(19.2)
(15.0)
Deferred tax is recorded in the balance sheet as follows:
Deferred tax assets
Deferred tax liabilities
Net deferred tax liability
Deferred tax assets in respect of tax losses carried forward are recognised to the extent that the realisation of the related tax benefit through future
taxable profits is probable. The Group has unrecognised deferred tax assets arising on capital losses totalling £145.2m (2015: £170.0m). These
assets have not been recognised on the basis that there is insufficient certainty that capital gains will arise against which the Group can utilise these
losses. There is no time limit for the utilisation of those losses.
At the balance sheet date, the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries for which deferred
tax liabilities have not been recognised was £0.2m (2015: £0.2m). No liability has been recognised in respect of these differences because the Group
is in a position to control the timing of the reversal of the temporary differences and those differences are not expected to reverse in the foreseeable
future.
Temporary differences arising in connection with the Group's interests in the undistributed retained earnings of associates and joint ventures are not
considered to be material in either year.
47
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
11. Dividends
Amounts recognised as distributions to equity holders in the period:
Interim dividends for the current year of £421.92 per share (2015: £445.36 per share)
2016
2015
£m
£m
105.5
105.5
111.3
111.3
2016
2015
£m
£m
33.4
0.4
0.4
34.2
34.1
(0.7)
33.4
2016
2015
£m
£m
25.4
8.4
0.4
34.2
25.4
8.0
33.4
12. Goodwill
Cost and net book value
At beginning of the year
Additions
Foreign exchange translation gains/(losses)
Carrying amount
Goodwill, allocated by cash generating unit ("CGU"), is analysed as follows:
Consumer distribution
Australian Channels
South African Production
The Group tests goodwill for impairment in the accounting period in which a business combination takes place, and thereafter annually, or more
frequently if there are indications that goodwill might be impaired.
The recoverable amounts of the CGU's are determined from value in use calculations. The key assumptions used for these calculations are those
regarding discount rates and growth rates. Management estimates discount rates using pre-tax rates that reflect current market assessments of the
time value of money and the risks specific to each CGU.
No goodwill impairment has been recognised to date.
Consumer distribution business
The goodwill in this CGU arose as a result of the acquisition of 2 entertain on 6 August 2009. The cash flow projections used in determining value in
use are based on the current business plan approved by management, which covers a five year period after which cash flows have been extrapolated
using an expected long term growth rate of -6% (2015: -6%).
A discount rate of 14.9% (2015: 11.7%) has been applied to the cash flows.
Management is of the view that any reasonably possible change in key assumptions would not cause the carrying amount to exceed its recoverable
amount.
Australian Channels business
The goodwill in this CGU arose as a result of the acquisition of UK.TV on 1 July 2008. Cash flow projections used in the recoverable amount
calculation are based on financial budgets approved by management covering a period of five years (2015: five years) and a discount rate of 16.0%
(2015: 11.9%). Cash flows beyond the forecast period have been extrapolated using an expected growth rate of 1.0% (2015: 1.0%).
The main assumption on which the forecast cash flows are based is license fee rates. In forming its assumptions about license fee rates, the Group
has used a combination of long term trends and recently contracted terms.
Management believes that any reasonably possible change in the key assumptions on which the value in use of UK.TV is based would not result in
any impairment.
South African Production business
The goodwill in this CGU arose as a result of the acquisition of Rapid Blue (Pty) Ltd on 28 March 2016 (note 27). As the acquisition took place so
close to year end, no impairment review has been conducted.
48
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
13. Distribution rights
2016
2015
£m
£m
Cost
At 1 April
Additions
Foreign exchange translation gains
Fully amortised rights written off
At 31 March
622.0
128.5
0.5
(2.8)
748.2
474.6
145.9
1.7
(0.2)
622.0
Amortisation
At 1 April
Charge for the year
Foreign exchange translation losses
Fully amortised rights written off
At 31 March
419.2
121.0
0.5
(2.8)
537.9
304.5
113.0
1.9
(0.2)
419.2
Net book value
210.3
202.8
Included within distribution rights is self-funded content in the course of production totalling £0.3m (2015: £5.3m).
49
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
14.
Other intangible assets
Carrier
Agreements
2016
£m
Software
£m
Other
Total
£m
£m
Cost
At 1 April
Additions
Acquired through business combinations
Disposals
Foreign exchange translation gains
At 31 March
8.5
0.3
8.8
44.1
14.5
(17.4)
41.2
0.7
0.5
0.1
1.3
53.3
14.5
0.5
(17.4)
0.4
51.3
Amortisation
At 1 April
Charge for the year
Disposals
Foreign exchange translation losses
At 31 March
3.5
0.5
0.2
4.2
21.4
7.0
(17.4)
11.0
0.5
0.1
0.6
25.4
7.5
(17.4)
0.3
15.8
Net book value
4.6
30.2
0.7
35.5
Carrier
Agreements
2015
Software
Other
Total
£m
£m
£m
£m
Cost
At 1 April
Additions
Disposals
Foreign exchange translation losses
At 31 March
9.2
(0.7)
8.5
46.1
11.7
(13.7)
44.1
0.7
0.7
56.0
11.7
(13.7)
(0.7)
53.3
Amortisation
At 1 April
Charge for the year
Disposals
Foreign exchange translation gains
At 31 March
3.1
0.6
(0.2)
3.5
31.3
3.8
(13.7)
21.4
0.6
(0.1)
0.5
35.0
4.4
(13.7)
(0.3)
25.4
5.0
22.7
0.2
27.9
Net book value
Other assets comprise of customer relationships and non-compete agreements.
Of total software additions recognised during the year, £12.5m (2015: £10.6m) related to internally developed software.
50
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
15. Property, plant and equipment
Freehold
buildings
2016
£m
Cost
At 1 April
Additions
Acquired through business combinations
Disposals
Foreign exchange translation gains
At 31 March
Depreciation
At 1 April
Depreciation charge for the year
Disposals
Foreign exchange translation losses
At 31 March
Net book value
Net book value
Assets under
construction
0.2
0.2
24.5
0.6
(9.5)
0.3
15.9
37.0
3.3
0.1
(15.0)
0.4
25.8
12.5
2.6
0.1
(4.9)
0.3
10.6
-
74.2
6.5
0.2
(29.4)
1.0
52.5
-
12.4
1.0
(9.5)
0.3
4.2
22.9
3.7
(15.0)
0.2
11.8
10.3
1.3
(4.9)
0.1
6.8
-
45.6
6.0
(29.4)
0.6
22.8
11.7
14.0
3.8
-
29.7
Short leasehold
buildings
Plant and
machinery
Fixtures
and fittings
£m
Assets under
construction
£m
Total
£m
£m
£m
£m
£m
0.2
0.2
12.7
12.2
(0.2)
(0.4)
0.2
24.5
30.4
6.8
(2.0)
1.4
0.4
37.0
11.5
1.3
(0.4)
0.1
12.5
1.4
(1.4)
-
56.2
20.3
(0.2)
(2.8)
0.7
74.2
-
9.0
3.0
0.9
(0.1)
(0.4)
12.4
20.9
3.8
(2.0)
0.2
22.9
9.4
1.2
(0.4)
0.1
10.3
-
39.3
8.0
0.9
(0.1)
(2.8)
0.3
45.6
12.1
14.1
2.2
-
28.6
0.2
At 31 March 2016, the Group had contractual commitments for the acquisition of property, plant and equipment totalling £nil (2015: £1.3m).
51
Total
£m
£m
Depreciation
At 1 April
Depreciation charge for the year
Impairment charge for the year
Disposal of subsidiaries
Other disposals
Foreign exchange translation losses
At 31 March
Fixtures
and fittings
£m
Freehold
buildings
Cost
At 1 April
Additions
Disposal of subsidiaries
Other disposals
Transfers
Foreign exchange translation gains
At 31 March
Plant and
machinery
£m
0.2
2015
Short leasehold
buildings
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
16. Interests in joint ventures and associates
A list of the Group’s significant interests in joint ventures and associates, including the name, country of incorporation and proportion of ownership
interest, is given in note g to the Company financial statements.
The movements in joint ventures and associates during the year were as follows:
Joint ventures
Associates
Total
Joint ventures
Associates
Total
2016
2016
2016
2015
2015
2015
£m
£m
£m
£m
£m
£m
0.6
0.6
30.8
(0.3)
(19.6)
12.1
151.2
2.3
(3.0)
1.8
11.0
(0.3)
(7.0)
3.1
0.6
159.7
151.8
2.9
(3.0)
1.8
41.8
(0.6)
(26.6)
3.1
0.6
171.8
0.7
0.6
27.6
1.1
(29.6)
0.2
0.6
12.1
122.9
0.8
8.2
(0.5)
(2.4)
12.1
(2.0)
151.2
12.8
123.5
0.8
35.8
0.6
(32.0)
12.3
(2.0)
151.8
Joint ventures
Associates
Total
Joint ventures
Associates
At 1 April
Additions
Disposals
Loan converted to equity
Share of results
Adjustment to provision for unrealised profits
Dividends receivable
Foreign exchange translation gains
Amounts written back/(off)
At 31 March
Joint ventures and associates are recorded in the balance sheet as follows:
Interests in joint ventures and associates
Non-current assets held for sale (note 21)
Total
2016
2016
2016
2015
2015
2015
£m
£m
£m
£m
£m
£m
12.1
12.1
159.7
159.7
171.8
171.8
0.6
0.6
148.2
3.0
151.2
148.8
3.0
151.8
Additions and the loan conversion relate to investments in independent production companies.
Interests in joint ventures
Interests in joint ventures in the current and previous years included the following material operation:
UKTV
BBC Worldwide has a major partnership deal with Scripps Networks Interactive ("Scripps") for the production, marketing and supply on a wholesale
basis of free-to-air and subscription channels in the UK. The partnership operates through the joint venture company UKTV Media Holdings Limited
("UKTV").
UKTV was the only material joint venture undertaking held by the Group in both the current and the prior year.
52
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
16. Interests in joint ventures and associates (continued)
The following represents the Group's aggregate share of joint ventures during the year:
UKTV
Total
UKTV
2016
Other JVs
2016
2016
2015
Other JVs
2015
2015
Total
£m
£m
£m
£m
£m
£m
Aggregation of 100% of each joint venture:
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Group's share of net assets of joint ventures
Provision for unrealised profit
Interests in joint ventures at 31 March
6.8
220.0
(137.9)
(54.1)
34.8
17.3
(5.3)
12.0
0.1
5.4
(7.3)
(1.8)
0.1
0.1
6.9
225.4
(145.2)
(54.1)
33.0
17.4
(5.3)
12.1
5.6
186.5
(127.8)
(53.5)
10.8
5.3
(5.0)
0.3
0.3
4.7
(4.9)
(1.1)
(1.0)
0.3
0.3
5.9
191.2
(132.7)
(54.6)
9.8
5.6
(5.0)
0.6
Revenue
Expense
Interest payable
Taxation
Profit from joint ventures
Profit from joint ventures attributable to other parties
Other adjustments
Group's share of profit from joint ventures
329.4
(248.4)
(3.8)
(15.8)
61.4
(30.7)
30.7
17.1
(17.6)
(0.1)
(0.6)
0.7
0.1
346.5
(266.0)
(3.8)
(15.9)
60.8
(30.0)
30.8
288.0
(216.4)
(3.7)
(14.1)
53.8
(26.9)
26.9
12.0
(11.1)
(0.1)
0.8
(0.4)
0.3
0.7
300.0
(227.5)
(3.7)
(14.2)
54.6
(27.3)
0.3
27.6
Included within the UKTV balance sheet are cash and cash equivalents of £21.9m (2015: £13.5m), financial liabilities of £130.8m (2015: £125.2m)
and non-current financial liabilities of £54.1m (2015: £53.5m). Included within UKTV's expense for the year is a depreciation charge of £2.3m (2015:
£2.1m) and an amortisation charge of £118.3m (2015: £106.8m).
53
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
16. Interests in joint ventures and associates (continued)
Interests in associates
Interests in associates in the current and previous years included the following material operation:
New Video Channel America, LLC. ("NVCA")
As set out in Note 28, on 23 October 2014, the Group sold a 49.9% stake in NVCA, formerly a wholly-owned subsidiary of BBC Worldwide Americas
Inc., and retained an investment of 50.1% in NVCA. Whilst the Group retains significant influence over NVCA, and has the right to variable returns, it
no longer has control, and hence the Group has deconsolidated NVCA from the date of the sale and accounts for its retained interest since that date
as an associate.
The following represents the Group's share of associates held during the year:
NVCA
Other
Total
NVCA
Other
Total
2016
2016
2016
2015
2015
2015
£m
£m
£m
£m
£m
£m
Aggregation of 100% of each associate:
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Group's share of net assets
Goodwill on acquisition
Provision for unrealised profit
Interests in associates at 31 March
135.9
69.2
(25.5)
(6.0)
173.6
87.0
60.2
(3.7)
143.5
4.4
40.5
(25.8)
(8.4)
10.7
3.5
12.9
(0.2)
16.2
140.3
109.7
(51.3)
(14.4)
184.3
90.5
73.1
(3.9)
159.7
133.2
63.6
(26.9)
(7.3)
162.6
81.5
58.7
(3.5)
136.7
6.1
34.1
(17.9)
(8.1)
14.2
4.0
10.5
14.5
139.3
97.7
(44.8)
(15.4)
176.8
85.5
69.2
(3.5)
151.2
Revenue
Result for the year
Group's share of results of associates
113.6
18.0
10.0
43.2
1.7
1.0
156.8
19.7
11.0
42.8
15.0
7.5
39.9
4.2
0.7
82.7
19.2
8.2
The Group has board representation and participates in policy-making decisions affecting Educational Publishers LLP and Woodlands Books Limited.
The Group has concluded that it exerts significant influence over these businesses despite holding less than 20% of the voting power. Accordingly,
the Group has classified its interests in these entities as associates.
54
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
17. Investments
Available-for-sale investments
Unquoted equities
Loans receivable carried at amortised cost
Loans to joint ventures and associates (note 35)
Loans to other entities
Total investments
2016
2015
£m
£m
7.5
4.4
6.0
3.0
9.0
0.5
8.2
8.7
16.5
13.1
18. Programme rights and other inventories
Programme rights for broadcast
Programmes in the course of production
Raw materials and consumables
Format rights
Work in progress
Finished goods and goods for resale
2016
2015
£m
£m
34.7
6.0
1.8
0.1
0.3
10.0
52.9
31.4
17.8
1.7
1.4
15.0
67.3
19. Trade and other receivables
Current
Trade receivables
Prepayments
Royalty advances
Accrued income
Amounts owed by joint ventures and associates (note 35)
Other receivables
Non-current
Trade receivables*
* In 2015, this balance was classified within current assets.
The net carrying amounts of trade and other receivables approximates to their fair value.
55
2016
2015
£m
£m
200.5
13.3
7.0
71.8
24.5
7.6
324.7
172.4
13.3
10.3
65.6
43.2
35.3
340.1
56.5
56.5
27.1
27.1
381.2
367.2
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
19. Trade and other receivables (continued)
Included in the Group’s trade and other receivables at 31 March 2016 are balances of £28.0m (2015: £21.7m) which are past due at the reporting date
but are not impaired because the Group expects to recover these balances in full, and has historical analysis to support the recovery profile. The aged
analysis of these balances is as follows:
Up to 3 months
3 to 6 months
Over 6 months
2016
2015
£m
£m
22.6
3.1
2.3
28.0
16.7
2.9
2.1
21.7
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit
was initially granted up to the reporting date. Trade receivables are provided against based on estimated irrecoverable amounts, determined by
reference to past default experience of the counterparty and an analysis of the counterparty’s financial situation (see note 34).
Amounts charged to the impairment provision are written off when there is no expectation of recovery. Subsequent recoveries of amounts previously
written off are credited to the Income Statement. The impairment provision stands at £1.6m at 31 March 2016 (2015: £1.2m).
The movement in the allowance for doubtful debts is set out below:
Balance at the beginning of the year
Impairment losses recognised
Amounts written off
Impairment losses reversed
56
2016
2015
£m
£m
1.2
2.6
(1.1)
(1.1)
1.6
3.6
1.1
(0.7)
(2.8)
1.2
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
20. Trade and other payables
Current
Trade payables
Rights creditors
Accruals
Deferred income
Amounts owed to ultimate parent undertaking
Amounts owed to fellow subsidiary undertakings
Amounts owed to joint ventures and associates (note 35)
Other payables including other tax and social security
Non-current
Trade and other payables
2016
2015
£m
£m
40.6
150.0
50.8
50.7
50.3
16.7
4.2
36.3
399.6
44.1
106.0
60.2
58.0
47.6
16.0
3.4
69.9
405.2
2.3
2.3
0.8
0.8
401.9
406.0
Rights creditors comprise royalty payments owing to producers of and contributors to television programmes, DVDs and other media. Other payables
include £4.0m relating to contingent considerations (2015: £1.8m) (see note 34).
The carrying amounts of trade and other payables approximate to their fair value.
21. Assets held for sale
As at 31 March 2015, following the Board's approval for disposal of the Temple Street associate, the investment was reclassified as an asset held for
sale at its carrying value of £3.0m. The investment was sold during the year ending 31 March 2016 (see note 28).
57
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
22. Provisions
Property related
At 1 April
Additional provision in the year
Utilisation of provision
Released to the Consolidated income statement
At 31 March 2016
Onerous
contracts
Other
Total
£m
£m
£m
£m
4.3
0.3
(2.1)
(2.0)
0.5
2.0
(1.6)
(0.3)
0.1
0.9
1.3
(0.8)
1.4
7.2
1.6
(4.5)
(2.3)
2.0
Property-related provisions include onerous leases in respect of properties held under non-cancellable leases, when the expected benefits to be
derived by the Group from subletting those properties are lower than the unavoidable costs payable over the remaining term of the respective leases,
together with provisions for dilapidations in respect of leasehold properties.
Provisions for onerous contracts are recognised when the expected benefits to be derived by the Group from a contract are lower than the
unavoidable cost of meeting its obligations under the contract.
Other provisions primarily comprise restructuring provisions.
Provisions are analysed between current and non-current as follows:
Current
Non-current
58
2016
2015
£m
£m
1.9
0.1
2.0
5.3
1.9
7.2
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
23.
Interest-bearing loans and borrowings
The Group's principal sources of funding and the currencies in which funding is denominated are summarised as follows:
Sterling
Unsecured borrowings at amortised cost
Loans from related parties
Bank loans
Total borrowings
Amount due for settlement within 12 months
Amount due for settlement after more than 12 months
Indian Rupee
Total
Sterling
Indian Rupee
Total
2016
2016
2016
2015
2015
2015
£m
£m
£m
£m
£m
£m
167.6
167.6
0.3
0.3
167.6
0.3
167.9
135.5
135.5
0.3
0.3
135.5
0.3
135.8
167.6
167.6
0.3
0.3
167.9
167.9
135.5
135.5
0.3
0.3
0.3
135.5
135.8
The Group's principal source of funding is a multi-currency loan facility of £202.2m (2015: £202.2m) with BBC Commercial Holdings Limited (BBCCH),
its intermediate parent undertaking, of which £30.0m (2015: £30.0m) is available only on condition that an equivalent cash balance is maintained. As
at 31 March 2016, the facility expiry date was 30 September 2016; however, this has since then been extended until 30 September 2017. The facility
attracts interest based on BCCH's borrowing cost plus a margin of 1.0%.
The Group also has a loan facility in India of INR 220m (£2.3m) (2015: INR 120m (£1.3m)), which includes a working capital facility of INR 120m
(£1.3m) (2015: £1.3m) and an overdraft limit within this facility of INR 140m (£1.5m) (2015: INR 40m (£0.4m)). The loan facility has no expiration date
but can be called upon for repayment at any time and therefore has been classed as current. The balance attracts interest of base rate plus a margin.
In addition, the Group has a multi-currency collective net overdraft facility with a limit of £2m and a base currency of GBP. This attracts interest of 1%
above base rate if drawn down in GBP, and interest of the bank's currency overdraft rate plus a 1% margin if drawn down in other currencies. As at
31 March 2016 and 31 March 2015, the facility was unutilised.
There are no charges over cash at bank or other financial assets in respect of borrowings or other liabilities (2015: none).
59
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
24.
Derivative financial instruments
Non-current
assets
2016
£m
Derivatives that are designated as cash flow hedges
Forward foreign currency contracts
Interest rate swaps
Derivatives that are not in a formal hedge relationship
Forward foreign currency contracts
Foreign currency swaps
Embedded derivatives
Derivatives that are not in a formal hedge relationship
Forward foreign currency contracts
Embedded derivatives
Non-current
liabilities
Total
£m
£m
£m
0.7
0.7
(11.9)
(0.1)
(12.0)
(5.0)
(5.0)
(16.1)
(0.1)
(16.2)
-
0.1
0.1
0.2
(1.6)
(0.4)
(2.0)
(0.8)
(2.2)
(3.0)
(2.3)
0.1
(2.6)
(4.8)
0.1
0.9
(14.0)
(8.0)
(21.0)
Current
assets
Current
liabilities
Non-current
liabilities
Total
£m
Derivatives that are designated as cash flow hedges
Forward foreign currency contracts
Interest rate swaps
£m
Current
liabilities
0.1
0.1
Non-current
assets
2015
Current
assets
£m
£m
£m
£m
2.7
2.7
7.5
7.5
(8.6)
(8.6)
(4.7)
(0.6)
(5.3)
(3.1)
(0.6)
(3.7)
0.1
0.1
0.2
0.9
0.9
(1.1)
(0.5)
(1.6)
(0.9)
(0.9)
(1.0)
(0.4)
(1.4)
2.9
8.4
(10.2)
(6.2)
(5.1)
Fair value movements on derivative financial instruments that are not in a formal hedge relationship are recorded in the Consolidated income
statement within other gains and losses.
The total notional principal amount of the outstanding forward foreign exchange contracts at 31 March 2016 was £328.9m (2015: £356.6m). The
hedged forecast transactions denominated in foreign currency are expected to occur at various dates in the future.
The Group applies cash flow hedge accounting for trades taken out in respect of its forecast foreign currency transactions. Hedge accounting is only
applied where appropriate designation and documentation, and trades with parties external to the Group, exist. Net losses (before tax) recognised in
the hedging reserve on forward foreign exchange contracts in cash flow hedge relationships at 31 March 2016 were £12.5m (2015: losses of £10.9m).
Future relevant amounts will be recognised in the income statement in the period when the hedged forecast transaction affects the income statement
at various dates over the next 48 months.
The notional principal amounts of the outstanding interest rate swap contracts at 31 March 2016 were £60.0m (2015: £60.0m). All outstanding interest
rate swaps mature by July 2016.
The Group has reviewed contracts for embedded derivatives that are required to be separated from their host contracts. Embedded derivatives are
recognised at their fair value with subsequent changes to fair value recorded in the income statement.
60
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
25.
Called up share capital
2016
2015
£m
£m
Authorised
1,000,000 ordinary shares of £1 each
1.0
1.0
Issued, alloted, called up and fully paid
250,000 ordinary shares of £1 each
0.2
0.2
The Company has one class of ordinary shares, which carry no right to fixed income.
26.
Reserves
Hedging reserve
The hedging reserve is used to record the effective portion of cumulative net changes in the fair value of cash flow hedging instruments, related to
hedged transactions that have not yet occurred (net of tax). During the current year, losses of £0.7m were removed from the hedging reserve and
debited to revenue in the income statement (2015: gains of £6.2m).
Translation reserve
The translation reserve comprises all foreign exchange differences arising since the transition to IFRS, from the translation of the financial statements
of foreign operations, as well as from the translation of liabilities that hedge the Group's net investment in foreign subsidiaries. Since 1 April 2008,
£3.5m of exchange losses on foreign currency borrowings have been offset in reserves against exchange gains on the related investment in overseas
subsidiaries (2015: £4.7m).
Other reserves
Other reserves includes revaluation of available-for-sale financial assets of £2.9m (2015: £nil) and to the fair value of the put option liabilities arising
on acquisition of new subsidiaries (note 27).
Retained earnings
At 31 March 2016, the cumulative goodwill written off to reserves on acquisitions prior to 1 April 1998 amounted to £14.2m. This amount is unchanged
from the prior year, and remained in equity upon transition to IFRS as permitted by IFRS 1.
27.
Acquisitions
Rapid Blue
On 28 March 2016, the Group acquired 70% of the shares of Rapid Blue (Pty) Ltd ('Rapid Blue'), a production company based in South Africa, for a
total consideration of £0.9m (net of cash acquired). The operations of Rapid Blue have been integrated in the CEMA business line, reported in the
Rest of the World reporting segment. The acquisition has been accounted for using the purchase method of accounting in accordance with IFRS 3,
Business Combinations . The full acquisition note has not been presented as the acquisiton is not considered to be material.
As part of the acquisition, the Group holds a call option for the remaining 30% of the shares, and the non-controlling interest party holds a put option.
The fair value of the expected consideration for the remaining shares has been recognised as a financial liability of £1.6m, through Other reserves.
Until options are exercised or expire, the changes in the fair value of the expected consideration will be recognised in the Consolidated income
statement.
61
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
28. Disposals
The following summarises the disposals of the Group for both the current and the prior year:
Temple Street
On 25 April 2015, the Group disposed of its interest in Temple Street Productions for cash consideration of £4.5m, resulting in a gain on disposal of
£1.5m. Net assets at the date of disposal were £3.0m.
BBC AMERICA
On 23 October 2014, BBC Worldwide sold a 49.9% stake in NVCA, formerly a wholly-owned subsidiary of BBC Worldwide Americas Inc., to AMC
Networks Inc. (“AMCN”) in return for proceeds of $200m (£123.0m), with BBCW retaining an investment of 50.1% in NVCA. The $200m proceeds
comprised $160m in cash and $40m deferred consideration in the form of a six-month promissory note, due by 23rd April 2015, settled during the year
ended 31 March 2016.
The disposal was a strategic move to take advantage of the greater negotiating power and sector knowledge of the larger US networks. While the
Group retained a 50.1% shareholding in NVCA, AMCN gained control over the key decision-making activities. Therefore, whilst the Group retained
significant influence over NVCA, and has the right to variable returns, it no longer had control, and hence the Group deconsolidated NVCA from the
date of the sale and started to account for its retained interest as an associate.
The net assets of NVCA at the date of disposal were:
23 October 2014
£m
Property, plant and equipment
Programme rights and other inventories
Trade and other receivables
Trade and other payables
Cash and cash equivalents
0.1
54.8
22.0
(15.7)
0.1
61.3
Net gain on disposal:
£m
Consideration for disposal
Fair value of associate recognised
Net assets disposed of
Fair value of retained liabilities, and transaction costs, in respect of business disposal
Cumulative currency translation losses
123.0
119.9
(61.3)
(59.6)
(6.1)
Net gain
115.9
Satisfied by:
Cash and cash equivalents
Deferred consideration
98.4
24.6
123.0
Net cash inflow arising on disposal:
Consideration received in cash
Less: Cash and cash equivalents disposed of
Less: Settlement of retained liabilities and transaction costs in respect of business disposal
62
98.4
(0.1)
(33.8)
64.5
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
29. Notes to the cash flow statement
2016
2015
£m
£m
Operating profit
106.4
116.3
Adjustments for:
Share of results of joint ventures and associates (including movements in provisions for unrealised profits)
Depreciation and impairment of property, plant and equipment
Amortisation and impairment of intangible assets
Impairment of investments
Impairment loss recognised on trade and other receivables
Reversal of impairment losses recognised on trade and other receivables
Net foreign exchange losses/(gains)
Decrease in provisions
Cash flows before movements in working capital
(41.2)
6.0
128.5
(0.1)
2.6
(1.1)
1.4
(5.2)
197.3
(36.4)
8.0
117.4
2.1
1.1
(2.8)
(0.5)
205.2
Increase in trade and other receivables
Decrease/(Increase) in programme rights and other inventories
(Decrease)/Increase in trade and other payables
Cash generated from operations
(43.1)
16.2
(9.4)
161.0
(33.6)
(16.5)
62.4
217.5
63
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
30. Commitments and contingent liabilities
Capital commitments
Distribution rights
Property, plant and equipment
Intangible assets
Other financial commitments
Programme rights for broadcast
Other commitments
Total unrecognised commitments
2016
2015
£m
£m
98.5
3.1
101.6
96.0
1.3
6.3
103.6
28.1
28.1
1.5
29.2
30.7
129.8
134.3
In addition to the above, the Group’s share of commitments for programme acquisitions and other commitments in respect of its UKTV joint venture
amount to £76.7m and £109.6m, respectively (2015: £10.4m and £59.6m, respectively).
The Group has a number of contingent liabilities arising from litigation and from the rights of its customers and suppliers to undertake routine audits.
These arise from trading activities undertaken in the ordinary course of business. BBC Worldwide makes specific provision for the best estimate of
any amounts which might be awarded as a result of these. Provision is only made to the extent that the Directors consider it probable that there will be
an outflow of economic benefits and the amount can be reliably estimated.
The Group has given guarantees in relation to the BBC Commercial Holdings Limited revolving credit facility agreement (see note 23). At 31 March
2016, total amounts drawn down under this facility were £45.0m (2015: £35.0m). In addition the Group has given guarantees in relation to a US
private placement in the name of BBC Commercial Holdings Limited which at year end was £177.9m (2015: £175.2m). At 31 March 2016, the total
amount of this debt was £222.9m (2015: £210.2m).
The Group occasionally enters into contracts with other equity shareholders of its joint ventures and associates to purchase additional equity. In some
cases, these contracts place an obligation on the Group to acquire further shares at the option of the counterparty to the contract. The Group has not
recorded a liability in respect of most of these contracts as the amounts payable in the event of exercise are based on a proxy for the market value of
those shares. Amounts payable under such contracts are not expected to be material to the Group as a whole.
31. Operating lease arrangements
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases,
which fall due as follows:
Within one year
In the second to fifth years inclusive
After five years
2016
2015
£m
£m
8.1
27.7
84.3
120.1
9.0
30.0
88.5
127.5
The majority of operating lease payments represent rentals payable by the Group for certain of its properties. The rent payable under leases is subject
to renegotiation at the various intervals specified in the leases. Prior year's numbers have been adjusted for the effect of inflation.
64
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
32. Retirement benefits
The Group operates a number of its own defined contribution pension schemes. The assets of those schemes are held separately from those of the
Group in independently administered funds. Pension costs, representing contributions payable by the Group during the year, were £5.7m (2015:
£5.0m).
Many BBC Worldwide employees are members of the BBC Group’s pension schemes. These comprise the BBC Pension Scheme (a defined benefit
scheme which is now closed to new members), a small unfunded plan (the unfunded scheme, which is closed to new members) and defined
contribution schemes (LifePlan and the Group Personal Pension Scheme).
The BBC Pension Scheme provides benefits on a defined benefit basis funded from assets held in separate trustee-administered funds and was the
main pension plan of the Group. There are four sections to the BBC Pension Scheme: Old Benefits and New Benefits, which both provide benefits
based on final salary (subject to differing inflation caps), Career Average Benefits 2006 (CAB 2006) and Career Average Benefits 2011 (CAB 2011).
Although it covers the majority of current employees, it is now closed to new entrants.
BBC Worldwide, following the provisions within IAS 19 Employee Benefits for accounting in respect of Group schemes, accounts for its participation
in the scheme as if it were a defined contribution scheme. This is because there is no contractual agreement or stated policy for charging the net
defined benefit cost to scheme participants. The pension cost for this scheme therefore represents contributions payable by the Group to the scheme
and the costs amounted to £7.9 million in the year (2015: £13.2 million). No contributions were prepaid or accrued at 31 March 2016 (2015: £nil).
The following liabilities in respect of retirement benefits have been recorded in the financial statements of the BBC:
BBC Pension Scheme
Unfunded Scheme
Total
2016
2015
£m
£m
1,003.4
7.3
1,010.7
940.7
7.5
948.2
The actuarial valuation for the BBC Pension Scheme was updated for IAS 19 purposes to 31 March 2016 by Willis Towers Watson, consulting
actuaries. Additional disclosure about the scheme and its financial position under IAS 19 is presented below:
Scheme financial position
Scheme assets**
Scheme liabilities
Deficit
** excluding funds relating to additional voluntary contributions (AVCs)
65
2016
2015
£m
£m
12,821.4
(13,824.8)
(1,003.4)
12,766.3
(13,707.0)
(940.7)
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
32. Retirement benefits (continued)
Changes in the present value of plan liabilities
The table below illustrates the movement on the plan liabilities during the year. The most significant variables which affect this are the additional year
of pension benefits earned, interest charged on existing liabilities, any gains or losses relating to participants leaving the pension scheme, changes in
assumptions made and benefits paid out during the year.
At 1 April
Current service cost
Past service cost
Administration costs
Interest on pension plan liabilities
Experience (gains)/losses arising on plan liabilities
Changes in assumptions underlying plan liabilities
Contributions by plan participants
Benefits paid and expenses
Liabilities extinguished on settlements
At 31 March
2016
2015
£m
£m
13,707.0
185.4
(30.9)
7.7
459.3
(179.1)
125.3
0.9
(417.9)
(32.9)
13,824.8
12,192.7
181.0
1.1
8.4
533.1
(317.4)
1,499.4
0.8
(392.1)
13,707.0
Changes in the fair value of plan assets
The table below illustrates the movement on the plan assets during the year. The most significant variables which affect this are the additional year of
contributions made, changes in the value of the pension plan assets (including the investment return) and benefits paid during the year.
Employee contributions to the scheme are paid via a salary sacrifice arrangement and have therefore been treated as employer contributions.
At 1 April
Expected rate of return on plan assets
Actuarial gains/(losses) on plan assets
Contributions by employer
Contributions by plan participants
Benefits paid
Assets distributed on settlements
At 31 March
2016
2015
£m
£m
12,766.3
429.4
(146.5)
219.8
0.9
(417.9)
(30.6)
12,821.4
10,684.2
473.6
1,672.5
327.4
0.8
(392.2)
12,766.3
Plan Assets
The allocation of assets by the Trustees is governed by a need to manage risk against the desire for high returns and any liquidity needs. A high
percentage of assets are held in equities which the Trustees expect will produce higher returns in the long term. For more information, including target
asset allocations, on the Scheme see http://www.bbc.co.uk/mypension.
2016
Type of asset
Equities - quoted
Equities - unquoted
Pooled vehicles - quoted
Pooled vehicles - unquoted
Repurchase agreements
Derivatives
Fixed interest bonds - public sector
Fixed interest bonds - other
Index-linked bonds - public sector
Property – UK
Property – overseas
Alternatives*
Cash and other current assets
At 31 March
Actual return on pension plan assets**
2016
2015
2015
£m
%
£m
%
1,279.2
4.9
1,222.9
767.0
(1,718.1)
(33.5)
617.0
1,076.7
4,939.0
855.1
391.7
3,055.1
364.4
12,821.4
10.0
0.1
9.5
6.0
(13.4)
(0.3)
4.8
8.4
38.5
6.7
3.1
23.8
2.8
100.0
1,491.8
6.6
1,228.8
840.8
(763.2)
(54.6)
558.9
1,055.9
4,377.5
743.1
430.5
2,494.0
356.2
12,766.3
11.7
0.1
9.5
6.6
(6.0)
(0.4)
4.4
8.3
34.3
5.8
3.4
19.5
2.8
100.0
282.9
1,672.5
*Alternatives include private equity, debt and currency.
**This constitutes realised gains from the receipt of investment income (e.g. dividends and rent), transactions where assets are sold and unrealised
fair value changes.
66
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
32. Retirement benefits (continued)
Funding the Scheme
The 2013 actuarial valuation by Willis Towers Watson of the pension scheme showed a funding shortfall of £2,054m. Consequently a recovery plan
was agreed between the BBC and the pension scheme Trustees which details the contribution amounts to be paid by the BBC over a 12 year period
commencing 2014.
As described in note 4, additional contributions of £3.4m paid by the Group to the BBC in 2016 (2015: £8.1m) have been presented outside Headline
profit.
The contributions to the scheme by members are mainly paid via a salary sacrifice arrangement.
The next formal actuarial valuation is currently being performed as at 1 April 2016.
Projected
2017
Contribution rates
%
Employer
Employee (Old and New Benefits)
Employee (Career Average Benefits 2006)
Employee (Career Average Benefits 2011)
16.7
7.5
4.0
6.0
2016
%
16.7
7.5
4.0
6.0
2015
%
14.5
7.5
4.0
6.0
On the basis of pension assumptions made, the BBC Group expects to make contributions to the scheme totalling £132.2 million in 2016/2017.
Principal actuarial assumptions
The calculation of the scheme liabilities and pension charges, for IAS 19 purposes, requires a number of assumptions, both financial and
demographic, to be made.
The principal financial assumptions used by the actuaries, at the balance sheet date were:
2016
%
Rate of increase in salaries
Rate of increase in pension payments:
Old Benefits
New Benefits
Career Average Benefits (2006)
Career Average Benefits (2011)
Inflation assumption (RPI)
Inflation assumption (CPI)
Discount rate
2015
%
1.0
1.0
3.0
2.8
2.4
1.9
3.0
2.0
3.4
2.9
2.7
2.4
1.8
2.9
1.9
3.4
The sensitivities regarding the principal assumptions used to measure the scheme's liabilities are set out below:
2016
Impact on
Impact on
scheme liabilities scheme liabilities
Assumption used
Movement
Discount rate
Discount rate
Retail price inflation rate
Retail price inflation rate
Mortality rates
Mortality rates
2015
3.4%
3.4%
2.9%
2.9%
See below
See below
Decrease 0.1%
Increase 0.1%
Decrease 0.1%
Increase 0.1%
Decrease 0.1%
Increase 0.1%
2.2
1.6
1.7
1.8
3.4
3.6
£m
(294)
221
231
(237)
464
(480)
Impact on
Impact on
scheme liabilities scheme liabilities
Assumption used
Movement
Discount rate
Discount rate
Retail price inflation rate
Retail price inflation rate
Mortality rates
Mortality rates
%
3.4%
3.4%
2.9%
2.9%
See below
See below
Decrease 0.1%
Increase 0.1%
Decrease 0.1%
Increase 0.1%
Decrease 0.1%
Increase 0.1%
67
%
2.2
1.7
1.8
1.8
3.5
3.6
£m
(308)
230
245
(251)
477
(494)
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
32. Retirement benefits (continued)
The average life expectancy assumptions, for members after retirement at 60 years of age, are as follows:
Principal demographic assumptions
Retiring today:
Male
Female
Retiring in 20 years:
Male
Female
2016
2015
Number of years
Number of years
27.6
30.0
27.5
29.9
29.5
32.0
29.4
31.9
The mortality assumptions have been selected to reflect the characteristics and experience of the membership of the scheme and are based on those
used for the actuarial investigation which was carried out for funding purposes as at 1 April 2013. The standard 'S1' series of tables, published by the
CMI, reflect recent research into mortality experience in the UK. A subset of these tables has been used for males and females, with a multiplier of
122% for males and 107% for females. For the allowance for future improvements, the CMI 2012 core projection has been adopted with a long term
trend of 1.25% for both males and females.
68
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
33. Capital management
The capital structure of the Group consists of net debt, which includes the borrowings disclosed in note 23 after deducting cash and cash equivalents,
and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as detailed in the Consolidated
statement of changes in equity.
The activities of the BBC are informed by an agreement with the Secretary of State for Culture, Media and Sport, which also stipulates borrowing
limits, both relative and absolute. This agreement currently limits the consolidated net debt of the BBC’s commercial subsidiaries to £350m. The
Group’s share of this limit is in turn agreed with the Group’s shareholder and informs the level of borrowings available to the Group.
The Group delivers long-term value to its ultimate parent, the BBC, through cash returned in the form of dividends as a share of the Group’s profits,
acquisition of BBC-commissioned content or intellectual property, direct investment in BBC programming, production of original content and growth in
the capital value of the BBC’s equity in the Group. The dividend policy of the Group is agreed with the BBC so as to achieve the optimum balance
between annual cash returns and investing for growth in programming, intellectual property or other assets to build value over the long term.
The BBC Trust’s principles require strict compliance with the four Commercial Criteria: fit with the BBC’s public purposes, brand reputation and brand
values, commercial efficiency, and fair trading policy. The Group’s policy in making investment decisions is governed by the BBC Trust’s principles
and commercial efficiency of the investment. The commercial efficiency of an investment is determined on a case-by-case basis, with respect to
financial metrics such as net present value, internal rate of return, payback period and profit margin.
As a diversified portfolio of businesses, the Group operates a framework for calculating investment discount rates that are tailored to different types of
investment. This framework applies appropriate risk premiums to the discount rate in order to ensure all risks relating to the investment are taken into
account and that the required rate of return is commensurate with this level of risk. This in turn allows the BBC and the Group to achieve the optimal
allocation of capital and balance its short term and long term return goals.
34. Financial instruments and risk management
Financial risk management objectives
In the normal course of its activities, the Group is exposed to a variety of financial risks, including market risk (mainly currency risk, interest rate risk
and price risk), credit risk and liquidity risk. BBC Worldwide takes a risk averse approach to cash and treasury management activities and seeks to
minimise the Group’s exposure to volatility in the financial markets. The Group uses derivative financial instruments to hedge certain risk exposures in
accordance with its hedging policy.
The Group’s financial risk management operations and associated trade execution activities are performed by BBC Group Treasury. All treasury
activities are governed within parameters defined formally in the policies agreed by the BBC Executive Board and BBC Worldwide Board. In addition,
treasury activities are routinely reported and are subject to review by management.
The Group’s financial instruments, other than those used for treasury risk management purposes, principally comprise cash and cash equivalents, a
debt facility provided by its parent, external borrowings and various items such as trade receivables and payables that arise directly from its
operations. The Group finances its operations from these financial instruments. The Group does not undertake speculative treasury transactions.
Currency risk
BBC Worldwide is exposed to foreign exchange risk arising from various currency exposures, principally in relation to the US dollar, the Euro and the
Australian dollar. The Group generates a surplus in most currencies in which it operates. The Group’s share of revenue from operations generated
outside the UK was 64.1% in 2016 versus 66.1% in 2015.
Foreign exchange transaction risk arises from recognised assets and liabilities and forecast future commercial transactions that are denominated in a
currency that is not the transacting entity's functional currency. Due to movements in exchange rates over time, the amount the Group expects to
receive or pay when it enters into a transaction may differ from the amount that it actually receives or pays when it settles the transaction. A small
proportion of related operating expenses will also be denominated in these foreign currencies providing some level of offset to these revenue
exposures.
The Group has implemented a hedging policy to minimise volatility in its financial results. The Group's policy is to hedge the majority of its forecast
net foreign currency trading covering a period of one year, and a proportion of forecast trading for a further year thereafter. Forward currency contracts
allow the Group to settle transactions at known exchange rates, and therefore to reduce uncertainty arising from currency risk.
69
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
34. Financial instruments and risk management (continued)
Currency risk (continued)
The overall cost of a hedged transaction and the associated forward currency contract in the income statement is fixed. However, where contracts
span financial years and hedge accounting is not applied, the fair value of the forward currency contract gives rise to gains/losses in each financial
year due to the timing difference between the recognition of such gains/losses and the recognition of the associated hedged transaction. The
gains/losses seen are therefore a result of market conditions as opposed to variances in contract value.
Some sales contracts also contain clauses whereby changes in currency rates outside of an agreed range impact on the contract price; in the majority
of cases the value of the individual contracts and other features within the contract limit the currency risk exposure to a level that is not significant to
the Group. Such clauses have been separated from the host contracts and recorded as embedded derivatives. The movement in fair values in these
derivatives is recorded through the income statement. Further details of the embedded derivatives are given in note 24.
Foreign exchange translation risk arises from the translation of overseas subsidiaries' income statements and balance sheets into sterling. This
translation currency risk may be hedged by funding overseas investments with loans in the same functional currency as the overseas investment. No
such net investment hedges were in place at 31 March 2016 or 31 March 2015.
The majority of the forward foreign currency contracts entered into by the Group are designated as hedging instruments in effective cash flow hedges.
Corresponding fair value movements have, accordingly, been recorded within other comprehensive income. For forward foreign currency contracts
not designated as hedging instruments, movements in fair value are recorded directly in the income statement within 'other gains and losses'.
The following table shows the profit/(loss) and equity impact on the Group’s derivative financial instruments of a 10% weakening of GBP compared to
other foreign currency rates:
2016
2015
£m
£m
Forward foreign currency contracts
Embedded derivatives
Total impact on derivatives
(34.4)
(0.3)
(34.7)
(36.1)
0.5
(35.6)
Impact on income statement
Impact on other comprehensive income
Total impact on comprehensive income
(6.8)
(27.9)
(34.7)
(6.9)
(28.7)
(35.6)
The same movement in currency rates would result in an income statement gain of £2.5m (2015: £4.7m) in respect of the Group’s interest-bearing
loans and borrowings and intragroup monetary assets and liabilities not eliminated on consolidation.
Interest rate risk
The Group’s main exposure to interest rate fluctuations arises on external interest bearing liabilities and loans from its parent undertakings. BBC
Worldwide borrows at floating rates of interest creating an exposure to cashflow interest rate risk. BBC Worldwide then use interest rate swaps, caps
and collars to generate the desired interest profile and to manage the Group’s exposure to interest rate fluctuations. The Group uses interest rate
swaps to fix interest rates so that greater certainty about the level of future interest payments can be achieved. Interest rate swaps, caps and collars
are taken out based on projected borrowing requirements, therefore differences will occur between the notional amount of swaps, caps and collars
and the actual borrowing requirements.
If interest rates had been 1% higher and all other variables were held constant, the Group's profit for the year ended 31 March 2016 would have
increased by £1.3m (2015: £0.9m). The incremental increase in profit is primarily attributable to the effect that such a change in interest rates would
have on the fair value of interest rate swaps, which fix all of the Group's external floating rate interest.
Other price risk
Other price risk is any price change other than those arising from changes in currency or interest rates.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations.
Credit risk arises from cash and cash equivalents, derivative financial instruments, available-for-sale financial assets and trade and other receivables.
Group treasury policies require that cash and cash equivalents and derivative financial instruments are held primarily with banks of A+ rating or better.
The Group’s credit risk management policy in relation to trade receivables involves regularly assessing the financial reliability of customers, taking into
account several factors such as their financial position and historical performance. The carrying amount of financial assets included in the financial
statements represents the Group’s maximum exposure to credit risk in relation to these assets. For 2016, one (2015: nil) customer comprised 10.9%
of the Group's total revenues. This same customer comprised 31.4% of the Group's trade receivables balance as at 31 March 2016. No other
customer accounted for 10% or more of the Group's revenue for 2016 or 2015.
The Group's other classes of financial assets do not contain impaired assets and are not past due.
70
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
34. Financial instruments and risk management (continued)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. BBC Worldwide is subject to ceilings imposed
on its borrowings by BBC Group, which in turn is subject to limits set by the Secretary of State as described in note 33. At 31 March 2016, the net
debt limit imposed by BBC Group on BBC Worldwide was £172.2m (2015: £172.2m), with a gross debt limit of £202.2m (2015: £202.2m) subject to
an equivalent £30.0m (2015: £30.0m) cash balance being held. These limits are subject to review going forward.
In order to comply with this ceiling together with the terms of any individual debt instruments, BBC Worldwide manages its liquidity through a number
of measures, including regular cash flow reporting, forecasting, hedging against foreign exchange fluctuations and proactively managing working
capital.
Maturity analysis of financial liabilities
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period to contractual maturity at the
balance sheet date. The amounts disclosed in the table are the contractual undiscounted cash flows and will therefore not reconcile to the amounts
disclosed in the balance sheet for borrowings, derivative financial instruments and trade and other payables.
Due in
less than
1 year
2016
Financial liabilities at fair value through profit and loss
Derivative financial instruments
Embedded derivatives
Other creditors
Financial liabilities measured at amortised cost
Bank loans
Loan from intermediate parent undertaking
Trade and other payables
Financial liabilities at fair value through profit and loss
Derivative financial instruments
Embedded derivatives
Other creditors
Financial liabilities measured at amortised cost
Bank loans
Loan from intermediate parent undertaking
Trade and other payables
71
Due in
2 to 3 years
Due after
more than
3 years
Total
£m
£m
£m
£m
£m
13.6
0.4
2.0
5.8
0.6
0.6
-
1.6
2.9
19.4
2.6
5.5
0.3
169.2
347.2
-
-
-
0.3
169.2
347.2
Due in
less than
1 year
2015
Due in
1 to 2 years
Due in
1 to 2 years
Due in
2 to 3 years
Due after
more than
3 years
Total
£m
£m
£m
£m
£m
10.1
0.5
1.1
5.5
1.0
0.5
-
-
16.1
0.5
2.1
0.3
2.0
346.2
136.4
-
-
-
0.3
138.4
346.2
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
34. Financial instruments and risk management (continued)
Categorisation of financial assets and liabilities
Assets as per Balance Sheet
Derivative financial instruments
Embedded derivatives
Assets held for sale
Unquoted equities
Loans receivable
Trade and other receivables
Cash and cash equivalents
Available-for-sale
Loans and
receivables
Derivatives
2016
2016
2016
2016
£m
£m
£m
1.0
1.0
7.5
7.5
9.0
311.4
45.8
366.2
Derivatives
Total
2015
2015
2015
2015
£m
£m
£m
£m
£m
1.0
7.5
9.0
311.4
45.8
374.7
3.0
4.4
7.4
8.7
353.9
66.6
429.2
11.2
0.1
11.3
11.2
0.1
3.0
4.4
8.7
353.9
66.6
447.9
Other financial
liabilities
Derivatives
Total
Other financial
liabilities
Derivatives
Total
2016
2016
2016
2015
2015
2015
£m
£m
£m
£m
£m
19.4
2.6
22.0
19.4
2.6
0.1
0.3
167.6
351.2
541.2
0.3
135.5
348.0
483.8
15.9
0.5
16.4
15.9
0.5
0.3
135.5
348.0
500.2
£m
Liabilities as per Balance Sheet
Derivative financial instruments
Embedded derivatives
Non-controlling interest
Bank loans
Loan from intermediate parent undertaking
Trade and other payables
Loans and
receivables
Total Available-for-sale
0.1
0.3
167.6
351.2
519.2
Non-derivative financial assets consist of cash at bank, short-term investments, available-for-sale investments, trade receivables, other receivables
and accrued income. Non-derivative financial liabilities consist of borrowings, trade payables, other payables and accruals.
The fair values of all non-derivative financial instruments approximate to the carrying value in the Balance Sheet. The following methods and
asumptions have been used to determine fair values:
•
The fair values of cash at bank and bank loans approximate their carrying values because of the short-term maturity of these instruments; and
•
The fair value of trade and other receivables and payables, accrued income and accrued costs approximate their carrying values (see notes 19
and 20, respectively).
72
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
34. Financial instruments and risk management (continued)
Fair value hierarchy and valuation techniques
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels
1 to 3 based on the degree to which the fair value is observable:
•
•
•
Level 1 fair value measurements are those derived from quoted market prices (unadjusted) in active markets for identical assets and liabilities;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on
observable market data (unobservable inputs).
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
2016
2016
2016
2016
2015
2015
2015
2015
£m
£m
£m
£m
£m
£m
£m
£m
1.0
-
-
1.0
-
-
11.2
-
0.1
11.2
0.1
1.0
7.5
7.5
7.5
8.5
-
11.2
4.4
4.5
4.4
15.7
(19.4)
(19.4)
(2.6)
(4.0)
(6.6)
(19.4)
(2.6)
(4.0)
(26.0)
-
(15.9)
(15.9)
(0.5)
(1.8)
(2.3)
(15.9)
(0.5)
(1.8)
(18.2)
Financial assets at fair value through profit and loss
Derivative financial instruments
Embedded derivatives
Available-for-sale financial assets
Unquoted equities
-
Financial liabilities at fair value through profit and loss
Derivative financial instruments
Embedded derivatives
Other payables
-
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred
between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
The fair values of derivative financial instruments are calculated using quoted prices. Where such prices are not available, a discounted cash flow
analysis is performed using the applicable yield curve for the duration of the instruments for non-optional derivatives, and option pricing models for
optional derivatives. Foreign currency forward contracts are measured using quoted forward exchange rates and yield curves derived from quoted
interest rates matching the maturities of the contracts. Interest rate swaps are measured at the present value of future cash flows estimated and
discounted based on the applicable yield curves derived from quote interest rates.
Level 3 financial liabilities recorded at fair value and included within other payables relate to contingent consideration and written put options issued to
non-controlling interests in the Group's subsidiaries. The fair value of such instruments is calculated based on the strike price of the options and
management's best estimate of the date at which the options will be exercised. Embedded derivatives are also assessed as a level 3 financial liability.
Where the strike price of an option is based on the fair value of the underlying business, this has been estimated based on forecasts of future cash
flows prepared by management.
The change in fair value of Level 3 financial instruments is reconciled as follows:
Financial Assets
Financial
Liabilities
£m
£m
£m
£m
£m
£m
(2.3)
(3.3)
(0.1)
(1.6)
0.7
(6.6)
2.2
(3.2)
2.9
(0.1)
(1.6)
0.7
0.9
4.4
0.1
4.5
(1.6)
(0.6)
(0.1)
(2.3)
2.8
(0.5)
(0.1)
2.2
Opening balance
Change in fair value recorded in other gains and losses
Change in fair value recorded in reserves
Unwinding of discount recorded within finance expense
Acquisitions
Settlements
Closing balance
4.5
0.1
2.9
7.5
73
Total 2016
Financial Assets
Financial
Liabilities
Total 2015
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
35. Related party transactions
Trading transactions
The related party transactions of the Group have been presented in accordance with IAS 24 Related Party Disclosures . Related parties of BBC
Worldwide include its subsidiary, associated and joint venture undertakings, its parent undertakings and fellow subsidiaries, and key management
personnel of the Group and their close family members. Transactions between the BBC and BBC Worldwide Group pension schemes are detailed in
note 32.
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in
this note. Amounts owed by and to the BBC, the intermediate parent undertaking and fellow subsidiary undertakings within the BBC Group are
reported in notes 19 and 20 respectively.
The following table illustrates transactions with BBC Group entities during the year:
Dividends paid
Interest costs
Acquisition of distribution rights
Royalties and other programme related fees
Other expense
Pension top-up
Ad sales commission
Programme licence income
Other income
2016
2015
£m
£m
(105.5)
(2.2)
(61.0)
(19.5)
(34.6)
(3.4)
16.9
11.3
2.2
(195.8)
(111.3)
(1.8)
(59.9)
(19.5)
(42.6)
(8.1)
17.1
16.9
7.9
(201.3)
Other income and expense includes recharges of administrative and other similar costs including property recharges, and amounts payable in
accordance with service level agreements.
The value of transactions conducted with joint ventures and associates was as follows:
Income
Name of related party
UKTV Media Holdings Limited
Other joint ventures
New Video Channel America LLC
Other associates
Relationship
Joint Venture
Joint Venture
Associate
Associate
Dividends
receivable
Expense
Income
Expense
Dividends
receivable
2016
2016
2016
2015
2015
2015
£m
£m
£m
£m
£m
£m
50.0
0.7
20.7
4.5
75.9
(0.6)
(9.2)
(5.4)
(15.2)
18.8
0.8
6.4
0.6
26.6
47.9
0.7
12.7
2.5
63.8
(0.8)
(3.6)
(14.7)
(19.1)
28.7
0.9
2.1
0.3
32.0
All transactions with related parties arise in the normal course of business on an arm’s length basis. None of the balances are secured.
The following amounts were outstanding at the balance sheet date:
Receivables
Name of related party
UKTV Media Holdings Limited
Other joint ventures
New Video Channel America LLC
Other associates
Relationship
Joint Venture
Joint Venture
Associate
Associate
Payables
Net balance
Receivables
Payables
Net balance
2016
2016
2016
2015
2015
2015
£m
£m
£m
£m
£m
£m
14.4
0.1
9.4
6.6
30.5
(4.0)
(0.2)
(4.2)
14.4
0.1
5.4
6.4
26.3
24.1
17.4
2.2
43.7
(3.3)
(0.1)
(3.4)
24.1
14.1
2.1
40.3
The receivables balance includes amounts loaned to joint ventures and associates disclosed in note 17.
At 31 March 2016, the Group also had an outstanding balance of £1.0m (2015: £1.0m) payable to a joint venture of the Group's ultimate parent in
respect of group relief. This balance is included within other payables.
74
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the consolidated financial statements (continued)
35. Related party transactions (continued)
Remuneration of key management personnel
The Group considers key management personnel as defined under IAS 24 Related Party Disclosures to be Directors of the Group, together with the
BBC Worldwide Executive Committee. Total emoluments for key management personnel were:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
2016
2015
£m
£m
5.2
0.3
0.1
5.6
5.6
0.4
0.2
6.2
The above figures for emoluments include the remuneration of Directors (note 7).
36. Parent undertaking and controlling party
The Group’s immediate parent is BBC Ventures Group Limited, which is in turn 100% owned by BBC Commercial Holdings Limited. The ultimate
parent undertaking and controlling party is the British Broadcasting Corporation, which is incorporated in the United Kingdom by Royal Charter. The
largest group in which the results of BBC Worldwide are consolidated is that headed by the BBC. The consolidated accounts of the BBC may be
obtained online at www.bbc.co.uk/annualreport.
37. Events after the balance sheet date
On 1 April 2016, the Group acquired an additional 47% of the shares of Baby Cow Productions Ltd ('Baby Cow'), a production company based in the
UK, for a total of £2.8m. Prior to the transaction, the Group held a 25% stake in the company, and as a result of this transaction the Group has gained
control of the acquiree. The full acquisition note has not been presented as the acquisiton is not considered to be material.
There were no other events subsequent to the balance sheet date details of which are required to be included in the financial statements.
75
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Company statement of comprehensive income
for the year ended 31 March 2016
2016
2015
£m
£m
b
85.2
91.4
n
2.9
-
n
n
(12.5)
2.5
(7.1)
(10.8)
2.2
(8.6)
78.2
82.8
Note
Profit for the year
Items that can be reclassified to profit or loss:
Available-for-sale financial assets:
Profit/(losses) on re-measurement of available-for-sale financial assets
Recognition and transfer of cash flow hedges
Tax on cash flow hedges taken directly to other comprehensive income
Other comprehensive income/(loss) for the year
Total comprehensive income for the year
76
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Company statement of changes in equity
for the year ended 31 March 2016
Share capital
Hedging reserve
£m
£m
Note
At 1 April 2014
0.2
Available-for-sale
Retained Earnings
reserve
£m
5.6
3.9
£m
187.9
Total Equity
£m
197.6
Profit for the financial year
b
-
-
-
91.4
91.4
Recognition and transfer of cash flow hedges
n
-
(10.8)
-
-
(10.8)
Tax on items taken directly to equity
n
-
2.2
-
-
2.2
Total comprehensive income for the year
-
(8.6)
-
91.4
82.8
Dividends paid
-
-
-
(111.3)
(111.3)
At 31 March 2015
0.2
(3.0)
3.9
168.0
169.1
Profit for the financial year
b
-
-
-
85.2
85.2
Recognition and transfer of cash flow hedges
n
-
(12.5)
-
-
(12.5)
Tax on items taken directly to equity
n
-
2.5
-
-
2.5
Revaluation of available-for-sale financial assets
-
-
2.9
-
2.9
Total comprehensive income for the year
-
(10.0)
Equity dividends paid
-
-
At 31 March 2016
0.2
78
(13.0)
2.9
6.8
85.2
78.2
(105.5)
(105.5)
147.7
141.8
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the company financial statements
a. Principal accounting policies
Basis of accounting
The separate financial statements of the Company are prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure
Framework (FRS 101). The financial statements are prepared under the historical cost convention modified to include the revaluation of investment
properties.
The Company has transitioned to FRS 101 from previously extant UK Generally Accepted Accounting Practice for all periods presented. A list of the
FRS 101 exemptions adopted by the Company has been provided in note s, along with reconciliations of all material adjustments made retrospectively
as a result of the transition. The accounting policies which follow set out those policies which apply in preparing the financial statements for the year
ended 31 March 2016.
Going concern
The financial statements are presented on a going concern basis and under the historical cost accounting convention. Further information about the
going concern assumption is given in note 1 (b) to the consolidated financial statements.
Investments
Fixed asset investments in subsidiaries, joint ventures and associates are shown at cost less any provision for impairment.
Foreign currency
The Company’s presentational and functional currency is sterling. Transactions in foreign currencies are translated into sterling at a monthly average
exchange rate.
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the balance sheet date at the rate of exchange ruling at
that date. Surpluses and deficits arising from the translation of monetary assets and liabilities at these rates of exchange, together with exchange
differences arising from trading, are included in the profit and loss account.
Distribution rights
Distribution rights represent rights to programmes and associated intellectual property acquired with the primary intention of exploiting the rights
commercially as part of the Group’s long-term operations. Distribution rights are initially recognised at acquisition cost or production cost, when the
Group controls the respective assets and the risks and rewards attached to them. The carrying amount is stated at cost less accumulated
amortisation and provision for impairment.
Amortisation of distribution rights is charged to the income statement to match the average revenue profile of the programme genre over its estimated
average marketable life. The expected lives of distribution rights range from 1 to 10 years.
Other intangible assets
i.
Internally-generated intangible assets: development expenditure
An internally-generated intangible asset arising from the Group’s development, including software and website development, is recognised when the
asset is technically and commercially feasible, sufficient resources exist to complete the development and it is probable that the asset will generate
future economic benefits. Any expenditure on research or development activities that does not meet the aforementioned criteria is recognised as an
expense in the period in which it is incurred.
Intangible assets with finite lives are amortised over their useful lives using the straight-line method. Amortisation expense is recorded within total
operating costs in the income statement. The useful lives used for intangible assets are as follows:
•
Software (including internally-generated software)
1-5 years
Useful lives are reviewed every year and adjustments are made, where applicable, on a prospective basis.
79
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the company financial statements (continued)
a. Principal accounting policies (continued)
Tangible fixed assets
Tangible fixed assets are stated at cost after any provision for impairment, less accumulated depreciation.
Cost comprises the aggregate amount paid and the fair value of any other consideration given to acquire the asset and includes costs directly
attributable to making the asset capable of operating as intended. Borrowing costs directly attributable to assets under construction and which meet
the recognition criteria in IAS 23 are capitalised as part of the cost of that asset.
Depreciation is charged so as to write off the cost of assets to their residual value, over their expected useful lives using the straight-line method.
Depreciation commences from the date an asset is brought into service.
The useful lives for depreciation purposes for the principal categories of assets are:
•
•
•
Short leasehold buildings
Plant and machinery
Fixtures and fittings
Unexpired lease term
3 to 8 years
3 to 10 years
Leased assets
Operating lease rentals payable are recognised on a straight-line basis over the term of the lease. The Company has no finance leases.
Impairment of fixed assets
At each balance sheet date, the Company reviews the carrying amounts of its tangible and intangible assets (including distribution rights) to determine
whether there is any indication that those assets have suffered an impairment loss. If such indication exists, an impairment loss is recognised in the
income statement for the amount by which an asset’s carrying amount exceeds its recoverable amount. Where an asset does not generate cash flows
that are independent of other assets, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Programme rights and stocks
Stocks, comprising of merchandising, are stated at the lower of cost and net realisable value. Programme rights for broadcasting refer to the
programme rights acquired for the future broadcast on one of the Company’s television channels. The carrying amount is stated at cost less
accumulated amortisation, and after writing off the costs of programme rights that are considered irrecoverable.
Financial instruments
Financial assets and liabilities are initially recognised as either financial assets/liabilities at fair value through profit or loss, loans and receivables,
available for sale financial assets or held to maturity investments and are measured at fair value less any directly attributable transaction costs, except
for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value. Policies applied by the Company in
respect of financial instruments are consistent with those applied by the Group, the Company has therefore adopted the FRS 101 paragraph 8(d)
disclosure exemptions as equivalent disclosures have been provided in the note 1 (r) to the Group financial statements.
Provisions
A provision is recognised in the balance sheet when the Company has a present legal or constructive obligation arising from past events and it is
probable that an outflow of economic benefits will be required to settle the obligation. Provisions, other than deferred tax, that are payable over a
number of years are discounted to net present value at the balance sheet date using a discount rate appropriate to the particular provision concerned.
Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its group, the Company
considers these to be insurance arrangements and accounts for them as such. In this respect, the Company treats the guarantee contract as a
contingent liability until such time as it becomes probable that the Company will be required to make a payment under the guarantee.
Pension costs
Contributions to defined contribution pension schemes are charged to the income statement as they fall due.
Employees of the Group also participate in defined benefit schemes operated by the Group’s ultimate parent, the British Broadcasting Corporation
(the “BBC”). The defined benefit schemes provide benefits based on pensionable pay. The assets of the BBC’s main pension scheme, the BBC
Pension Scheme, to which the majority of employees belong, are held separately from those of the BBC Group.
The BBC Pension Scheme is a group-wide scheme and there is no contractual agreement or stated policy for charging the net defined benefit cost to
scheme participants. The contribution rates are set by the pension scheme trustees based on valuations which take a longer-term view of the assets
required to fund the scheme’s liabilities. Valuations of the scheme are performed by Towers Watson, consulting actuaries, with formal valuations
undertaken at least every three years. Accordingly, the Company accounts for contributions payable to the scheme as if the schemes were defined
contribution schemes, as is required by IAS 19 Employee Benefits.
80
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the company financial statements (continued)
a. Principal accounting policies (continued)
Taxation
Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities based on tax rates and
laws that are enacted or substantively enacted by the balance sheet date.
Deferred income tax is recognised on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the
financial statements with the following exceptions:
Where the temporary difference arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss;
In respect of taxable temporary differences associated with investments in subsidiaries, associates and joint ventures, where the timing of the
reversal of the temporary differences can be controlled and it is probably that the temporary differences will not reverse in the foreseeable future;
and
Deferred income tax assets are recognised only to the extent that it is probably that taxable profit will be available against which the deductible
temporary differences, carried forward tax credits or tax losses can be utilised.
Deferred income tax assets and liabilities are measured on an undiscounted basis at the tax rates that are expected to apply when the related asset is
realised or liability is settled, based on tax rates and laws enacted or substantively enacted at the balance sheet date.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date.
Dividends on shares presented within shareholder's funds
Dividends unpaid at the balance sheet date are only recognised as a liability at that date to the extent that they are appropriately authorised and are
no longer at the discretion of the Company. Unpaid dividends that do not meet these criteria are disclosed in the notes to the Company financial
statements.
Goodwill
Goodwill arising on the acquisition of business trade and assets, representing any excess of the fair value of the considerations given over the fair
value of the identifiable assets and liabilities acquired, is capitalised and reviewed annually for impairment. On transition to FRS 101, the Company
reversed previous amortisation on Goodwill and recognised this change for the periods 1 April 2014 onwards. The Company has invoked the 'true and
fair override' of paragraph 10(2) of Schedule 1 to the Regulations to overcome the conflict which the 'non amortisation' of Goodwill has with paragraph
22 of Schedule 1 of the Regulations. The effect of this change has meant a reversal of £1.6m amortisation in the prior year.
Critical accounting estimates and key management judgements
The preparation of financial statements in confirmity with FRS101 requires the use of certain critical accounting assumptions, and requires
management to exercise its judgement and to make estimates in the process of applying the Company accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are consistent with
those disclosed within note 1 (u) of the Group accounts.
b. Profit for the year
As permitted by Section 408 of the Companies Act 2006, the Company has elected not to present its own profit and loss account for the year. The
Company reported a profit for the financial year ended 31 March 2016 of £105.2m (2015: £91.4m). A statement of comprehensive income has been
included in line with IFRS 1 to reflect the items of income and expense that are not recognised in profit or loss as required or permitted by FRS 101.
The auditor's remuneration for audit and other services is disclosed in note 6 of the consolidated financial statements.
81
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the company financial statements (continued)
c.
Goodwill
£m
Cost and Net book value
As at 1 April 2015 and 31 March 2016
13.8
Goodwill arose in the year ended 31 March 2013 following the hive-up of trade and assets from the Company's subsidiary, Bedder 6 Limited.
d.
Distribution rights
£m
Cost
At 1 April 2015
Additions
Fully amortised rights written off
At 31 March 2016
618.1
130.3
(2.7)
745.7
Amortisation
At 1 April 2015
Charge for the year
Fully amortised rights written off
At 31 March 2016
422.9
119.3
(2.7)
539.5
Net book value at 31 March 2016
206.2
Net book value at 31 March 2015
195.2
e.
Other intangible assets
Software
£m
Cost
At 1 April 2015
Additions
Disposals
At 31 March 2016
34.8
14.3
(17.4)
31.7
Amortisation
At 1 April 2015
Charge for the year
Disposals
At 31 March 2016
11.4
6.9
(17.4)
0.9
Net book value at 31 March 2016
30.8
Net book value at 31 March 2015
23.4
f.
Tangible fixed assets
Short leasehold
buildings
£m
Plant & Machinery
£m
Fixtures & Fittings
£m
Total
£m
Cost
At 1 April 2015
Additions
Disposals
At 31 March 2016
14.1
0.4
(7.9)
6.6
49.5
2.6
(14.3)
37.8
6.1
0.8
(4.5)
2.4
69.7
3.8
(26.7)
46.8
Depreciation
At 1 April 2015
Charge for the year
Disposals
At 31 March 2016
7.7
0.5
(7.9)
0.3
32.4
3.2
(14.3)
21.3
5.8
0.5
(4.5)
1.8
45.9
4.2
(26.7)
23.4
Net book value at 31 March 2016
6.3
16.5
0.6
23.4
Net book value at 31 March 2015
6.4
17.1
0.3
23.8
The Company does not hold any assets under finance leases (2015: £nil).
82
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the company financial statements (continued)
g.
Investments
2016
£m
Subsidiaries
Joint ventures
Associates
Other investments
95.9
0.2
14.4
16.6
127.1
2015
£m
101.9
14.0
13.1
129.0
The Company has investments in the following subsidiaries, joint ventures and associates which principally affected the profits or net assets of the Group.
Note
Ownership
interest
Country of incorporation or
establishment
Principal activity
Principal Subsidiary Undertakings
2 entertain Limited
+
United Kingdom
Holding company
100.0%
UK Programme Distribution Limited *
+
United Kingdom
Programme distributor
100.0%
Tonto Films and Television Limited
+
United Kingdom
Content production
100.0%
Worldwide Channel Investments Limited
+
United Kingdom
Holding company
100.0%
Rapid Blue
+
South Africa
Programme distributor
100.0%
BBC Worldwide Australia Holdings Pty Ltd
+
Australia
Holding company
100.0%
BBC Worldwide Canada Limited
+
Canada
Programme distributor
100.0%
BBC Worldwide France Sarl
+
France
Programme distributor
100.0%
BBC Worldwide Germany GmbH
+
Germany
Programme distributor
100.0%
BBC Worldwide Japan Limited
+
Japan
Programme distributor
100.0%
BBC Worldwide Holdings B.V
+
Netherlands
Holding Company
100.0%
BBC Worldwide Americas Incorporated
+
USA
Holding company
100.0%
Country of
incorporation or
Note establishment
Ownership
interest
Note
Country of incorporation
or establishment
Ownership
interest
Subsidiary undertakings
BBC Worldwide Investments Ltd
+
United Kingdom
100.0%
BBC Worldwide Music Limited
United Kingdom
100.0%
BBC Earth MD (WWD) Ltd
+
United Kingdom
100.0%
BBC Worldwide Productions (Africa) (Pty) Ltd
Africa
100.0%
BBC Earth Productions (Life) Ltd
+
United Kingdom
100.0%
BBC Worldwide (Africa) (Pty) Ltd
Africa
100.0%
BBC Earth Productions Ltd
+
United Kingdom
100.0%
BBC Worldwide Australia Pty Ltd
Australia
100.0%
BBC Worldwide Productions (UK) Ltd
+
United Kingdom
100.0%
BBC Worldwide Australia Publishing Pty Ltd
Australia
100.0%
BBC Magazines Rights Ltd
+
United Kingdom
100.0%
Nine Productions1 Incorporated
Canada
100.0%
BBC Magazine Holdings Ltd
+
United Kingdom
100.0%
Worldwide Channel Investments (Ontario) Ltd
Canada
100.0%
BBC World Service Televsision Ltd
+
United Kingdom
100.0%
2004370 Ontario Incorporated
Canada
100.0%
beeb Ventures Ltd
+
United Kingdom
100.0% Worldwide Knowledge (Beijing) Business Consulting Cpy Ltd
China
100.0%
European Channel Management Ltd
+
United Kingdom
100.0%
BBC Worldwide Productions Nordics ApS
+
Denmark
100.0%
BBC Worldwide Corporate Services Ltd
+
United Kingdom
100.0%
Erste Weltweit Medien GmbH
+
Germany
100.0%
beeb Rights Ltd**
+
United Kingdom
100.0%
BBC Worldwide Media Private Ltd
India
100.0%
European Channel Broadcasting Ltd
+
United Kingdom
100.0%
BBC Worldwide Channels Mexico S.A de C.V
+
Mexico
100.0%
2 entertain Video Ltd
United Kingdom
100.0%
BBC Worldwide Mexico S.A de C.V
+
Mexico
100.0%
Demon Music Group Ltd
United Kingdom
100.0%
BBC Worldwide Polska
+
Poland
100.0%
DVDS2 Ltd
United Kingdom
100.0%
BBC Worldwide Channels (Singapore) Pte. Ltd
+
Singapore
100.0%
DVDS3 Ltd
United Kingdom
100.0%
BBC.com US, Incorporated
+
USA
100.0%
BBC Earth Productions (Giant Films) Ltd
United Kingdom
100.0%
BBC Worldwide Americas (401) k Plan Trustees
USA
100.0%
Earth Film Productions Ltd
United Kingdom
100.0%
Worldwide Americas Investments Incorporated
USA
100.0%
BBC Magazines Rights 3 Ltd
United Kingdom
100.0%
Global Hybrid Productions LLC
USA
100.0%
BBC Magazines Rights 5 Ltd
United Kingdom
100.0%
Sun Never Sets Productions LLC
USA
100.0%
2 Entertain Management Ltd
United Kingdom
100.0%
Bad Wolf Productions LLC
USA
100.0%
BBC Video Ltd
United Kingdom
100.0%
Adjacent Productions, LLC
USA
100.0%
MCI Music Publishing Ltd
United Kingdom
100.0%
BBC Worldwide Reality Productions LLC
USA
100.0%
Crimson Productions Ltd
United Kingdom
100.0%
DWTS Productions LLC
USA
100.0%
F-Beat Records Ltd
United Kingdom
100.0%
Worldwide Competition Productions LLC
USA
100.0%
Demon Records Ltd
United Kingdom
100.0%
United Kingdom
100.0%
BBC Worldwide Intermediadora de
Programadora Estangeira Ltd
Brazil
100.0%
Bedder 6 Limited
+
83
+
+
+
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the company financial statements (continued)
g.
Investments (continued)
Country of
incorporation or
Note establishment
Ownership
interest
Joint Ventures
Note
Country of incorporation
or establishment
Ownership
interest
Associates
New Video Channel America LLC
USA
50.1%
UKTV Media Holdings Limited
+
United Kingdom
50.0%
Jasper Broadcasting Incorporated
Canada
50.0%
Sub-Zero Events Limited
+
United Kingdom
50.0%
Baby Cow Productions Limited
+
United Kingdom
25.0%
Tower Productions GmbH
+
Germany
50.0%
Burning Bright Productions Limited
+
United Kingdom
25.0%
BBC Earth Productions (Africa) Ltd
+
United Kingdom
100.0%
Clerkenwell Films Limited
+
United Kingdom
25.0%
UKTV Media Limited
United Kingdom
50.0%
Slim Film & TV Limited
+
United Kingdom
25.0%
Knowledge-West Communications Inc.
Canada
50.0%
Sprout Pictures (TV) Limited
+
United Kingdom
25.0%
JV Programs LLC
USA
50.0%
Children’s Character Books Limited
+
United Kingdom
25.0%
Educational Publishers LLP
+
United Kingdom
15.0%
Woodlands Books Limited
+
United Kingdom
15.0%
Lookout Point Limited
+
United Kingdom
35.0%
Curve Media Limited
+
United Kingdom
25.0%
India
18.2%
Investments
Viki, Inc.
+
USA
1.8%
Left Bank Pictures Limited
+
United Kingdom
12.2%
NC Internet Limited
+
United Kingdom
5.5%
Masher Technologies
+
United Kingdom
10.0%
Next Radio Limited
MSM- Worldwide Factual Media Private Ltd
+
India
26.0%
Amazing Productions Limited
+
United Kingdom
25.0%
Cliffhanger Films Limited
+
United Kingdom
25.0%
Greenbird Media Limited
+
United Kingdom
29.0%
Mighty Productions Limited
+
United Kingdom
25.0%
Red Planet Pictures (Entertainment) Limited
+
United Kingdom
25.0%
+
Held directly by BBC Worldwide Limited
*
BBC Worldwide holds 92.7% of the issued share capital but the non-controlling shareholders have no right to distributions.
**
BBC Worldwide holds 88.4% of issued share capital but the non-controlling shareholders have no right to distributions.
Listed below are subsidiaries controlled by the Group, where the Directors have taken the exemption from having an audit of its financial statements for the
year ended 31 March 2016. The exemption is taken in accordance with Companies Act 2005 s479A.
Subsidiary
Reg. No.
Subsidiary
Reg. No.
Bedder 6 Limited
05982502
BBC Magazines Rights 3 Ltd
06185864
Worldwide Channel Investments Limited
03309240
BBC Magazines Rights 5 Ltd
06185843
BBC Worldwide Investments Ltd
02701369
2 Entertain Management Ltd
05087003
BBC Earth MD (WWD) Ltd
07499958
BBC Video Ltd
04840888
BBC Earth Productions (Life) Ltd
05705186
Crimson Productions Ltd
02270191
BBC Magazines Rights Ltd
06186397
F-Beat Records Ltd
01459034
BBC World Service Televsision Ltd
02592868
Demon Records Ltd
01495331
beeb Ventures Ltd
04359440
BBC Worldwide Music Limited
02512074
European Channel Management Ltd
02948023
BBC Worldwide Corporate Services Ltd
07393413
beeb Rights Ltd**
04400579
European Channel Broadcasting Ltd
02964835
84
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the company financial statements (continued)
g.
Investments (continued)
Subsidiaries
JVs
Associates
Other investments
Total
£m
£m
£m
£m
£m
Cost
At 1 April 2015
Additions
Fair value uplift
Transfer
Disposals
At 31 March 2016
210.1
(12.3)
197.8
0.2
0.2
15.8
2.1
1.8
(3.6)
16.1
14.8
2.8
2.9
(1.8)
(1.4)
17.3
240.7
5.1
2.9
(17.3)
231.4
Provisions for impairment
At 1 April 2015
Charge for the year
Disposals
At 31 March 2016
108.2
(6.3)
101.9
-
1.8
1.3
(1.4)
1.7
1.7
(1.0)
0.7
111.7
1.3
(8.7)
104.3
Net book value at 31 March 2016
Net book value at 31 March 2015
h.
95.9
0.2
14.4
16.6
127.1
101.9
-
14.0
13.1
129.0
Programme rights and other stock
2016
£m
Programme rights for broadcasting
Programmes in the course of production
Finished goods for resale
i.
20.5
4.3
0.5
25.3
2015
£m
18.0
21.2
4.5
43.7
Trade and other receivables
2016
£m
Amounts falling due within one year:
Trade receivables
Prepayments and accrued income
Amounts owed by ultimate parent undertaking
Amounts owed by subsidiary undertakings
Amounts owed by joint ventures and associates
Derivative financial instruments
Corporation tax recoverable
Other receivables
Amounts falling due after more than one year:
Trade receivables
Derivative financial instruments
Deferred tax
85
2015
£m
90.7
52.0
2.1
178.4
24.0
0.9
6.3
3.6
358.0
90.0
44.3
0.1
182.9
38.6
8.4
2.4
5.8
372.5
24.5
0.1
8.2
32.8
2.8
6.1
8.9
390.8
381.4
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the company financial statements (continued)
j.
Trade and other payables
2016
£m
Amounts falling due within one year:
Bank loans and overdraft
Trade payables
Rights creditors
Accruals and deferred income
Amounts owed to ultimate parent undertaking
Amounts owed to subsidiary undertakings
Amounts owed to fellow subsidiary undertakings
Amounts owed to joint ventures and associates
Derivative financial instruments
Other payables including other taxes and social security
Amounts falling due after more than one year:
Loan owed to intermediate parent undertaking
Other payables
Derivative financial instruments
2015
£m
64.0
34.6
98.5
79.3
47.5
116.5
8.6
0.2
14.6
28.6
492.4
240.7
36.9
60.5
83.8
46.0
130.1
12.1
0.4
10.2
35.5
656.2
167.6
0.5
7.3
175.4
135.5
6.2
141.7
667.8
797.9
Details of bank loans and loans owed to the Company's intermediate parent undertaking are given in note 23 to the consolidated financial statements.
k.
Provisions for liabilities
Deferred tax Onerous contracts
£m
£m
At 1 April 2015
Provided during the year
Released in the year
Utilised in the year
At 31 March 2016
2.2
(2.0)
0.2
1.6
(0.3)
(1.3)
-
Other provisions
£m
Total
£m
2.5
1.2
(0.7)
(1.6)
1.4
6.3
1.2
(3.0)
(2.9)
1.6
Provisions for onerous contracts are recognised when the expected benefits to be derived by the Company from a contract are lower than the
unavoidable cost of meeting its obligations under the contract.
Other provisions primarily relate to reorganisation costs, property-related provisions including onerous, non-cancellable leases where the expected
benefits to be derived by the Company from subletting those properties are lower than the unavoidable costs payable over the remaining term of the
respective leases, and provisions for dilapidations in respect of leasehold properties.
Further deferred contingent consideration may be payable in connection with acquisitions made by the Company. No provision has been made where
the likelihood and magnitude of additional payments cannot be assessed with reasonable certainty.
The Company and some of its subsidiaries operate a cash pooling arrangement. All the cash balances within the pool belong to the legal entity to
which they relate, although the Company has access to all funds and each cash pool participant is jointly and severally liable for any overdraft
balance.
l.
Deferred tax
Deferred tax is provided as follows:
Fixed asset timing
differences
£m
At 1 April 2015
Charged to profit and loss
At 31 March 2016
2.8
0.5
3.3
Derivative timing
differences
£m
1.1
2.7
3.8
Provisions
£m
Total
£m
0.9
0.9
3.9
4.1
8.0
2016
2015
£m
£m
8.2
(0.2)
8.0
6.1
(2.2)
3.9
Deferred tax is recorded in the balance sheet as follows:
Deferred tax assets
Deferred tax liabilities
Net deferred tax asset
86
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the company financial statements (continued)
m.
Called up share capital
Issued and fully paid
250,000 Ordinary shares of £1 each
2016
£m
2015
£m
0.2
0.2
The Company has one class of ordinary shares, which carry no right to fixed income.
n.
Reserves
Available-for-sale Reserve
The available-for-sale reverse is used to record the fair value movement of the Company's Investments
Hedging Reserves
The hedging reserve is used to record the effective portion of cumulative net changes in the fair value of cash flow hedging instruments, related to
hedged transactions that have not yet occurred (net of tax). During the current year, gains of £10.0m were removed from the hedging reserves and
credited to revenue in the income statements (2015: £8.6m).
o.
Commitments and contingent liabilities
Contracts placed for future capital expenditure not provided are as follows:
2016
£m
Capital commitments
Tangible fixed assets
Distribution rights
Other financial commitments
Programme rights for broadcast
Other commitments
Total unrecognised commitments
2015
£m
3.1
98.5
101.6
6.3
96.0
102.3
28.1
28.1
1.5
25.2
26.7
129.7
129.0
In addition to the above, the Company’s share of commitments for programme acquisitions and other commitments in respect of its UKTV joint
venture amount to £76.7m and £109.6m, respectively (2015: £20.8m and £119.2m, respectively).
The Company has given guarantees in relation to the BBC Commercial Holdings Limited revolving credit facility agreement, see note 23 of the Group
accounts for further detail.
p.
Operating lease arrangements
At the balance sheet date, the Company had outstanding commitments for future minimum lease payments under non-cancellable operating leases,
which fall due as follows:
Within one year
Between two and five years
After more than five years
Total
q.
2016
2015
£m
£m
3.4
12.3
80.6
96.3
4.8
14.3
52.4
71.5
Related party transactions
The Group's consolidated financial statements for the year ended 31 March 2016 contain related party disclosures. Consequently, the Company has
taken advantage of the exemption under FRS 101 (IAS 24 Related Party Disclosures) not to disclose transactions with other members of the BBC
Group. The value of transactions conducted with non wholly-owned subsidiaries and with other related parties was as follows:
Name of related party
Relationship
UKTV Media Holdings Limited
New Video Channel America LLC
Other associates
Total
Joint Venture
Associate
Associate
Income
2016
£m
Expense Dividends received
2016
2016
£m
£m
50.0
17.6
3.6
71.2
(5.4)
(5.4)
87
18.8
0.4
19.2
Income
2015
£m
47.9
11.2
0.8
59.9
Expense Dividends received
2015
2015
£m
£m
14.2
14.2
28.7
0.1
28.8
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the company financial statements (continued)
q.
Related party transactions (continued)
The following amounts were outstanding with related parties at the balance sheet date:
Name of related party
Relationship
UKTV Media Holdings Limited
New Video Channel America LLC
Other associates
Total
Joint Venture
Associate
Associate
Receivables
Payables
Net balance
Receivables
Payables
Net balance
2016
2016
2016
2015
2015
2015
£m
£m
£m
£m
£m
£m
14.4
8.9
0.7
24.0
(0.2)
(0.2)
14.4
8.9
0.5
23.8
24.1
12.8
1.8
38.7
(0.3)
(0.1)
(0.4)
23.8
12.8
1.7
38.3
At 31 March 2016, the Company also had an outstanding balance of £1.3m (2015: £1.0m) payable to a joint venture of the Company's ultimate parent
in respect of group relief. This balance is included within other payables.
r.
Post balance sheet events
On 1 April 2016, the Company acquired an additional 47% of the shares of Baby Cow Productions Ltd ('Baby Cow'), a comedy production company
based in the UK, for a total of £2.8m. Prior to the transaction, the Company held a 25% stake in the company, and as a result of this transaction the
Group has gained control of the acquiree. The full acquisition note has not been presented as the acquisiton is not considered to be material.
There were no other events subsequent to the balance sheet date details of which are required to be included in the financial statements.
s.
Transition to FRS 101
For all periods up to and including the year ended 31 March 2015, the Company prepared its financial statements in accordance with previously extant
United Kingdom generally accepted accounting practice (UK GAAP). These financial statements, for the year ended 31 March 2016, are the first the
Company has prepared in accordance with FRS 101.
Accordingly, the Company has prepared individual financial statements which comply with FRS 101 applicable for periods beginning on or after 1 April
2015 and the significant accounting policies meeting those requirements are described in the relevant notes.
In preparing these financials statements, the Company has started from an opening balance sheet as at 1 April 2014, the Company's date of transition
to FRS 101, and made those changes in accounting policies and other restatements required for the first-time adoption of FRS 101. As such, this
note explains the principal adjustments made by the Company in restating its balance sheet as at 1 April 2014 prepared under previously extant UK
GAAP and its previously published UK GAAP financial statements for the year ended 31 March 2015.
On transition to FRS 101, the company has applied the requirements of paragraphs 6-33 of IFRS 1 "First time adoption of International Financial
Reporting Standards".
IFRS 1 allows first-time adopters certain exemptions from the general requirements to apply IFRSs as effective for March 2016 year ends
retrospectively. The Company has taken advantage of the following exemptions:
Per FRS 101 paragraph 7A, the Company has taken exemption from the requirement of paragraphs 6 and 21 of IFRS 1, to present an opening
statement of financial position at the date of transition.
The Company has taken advantage of the following disclosure exemptions under FRS 101 on the premise that equivalent disclosures have been
included in the consolidated financial statements of the group:
(a) The requirements of paragraphs 62, B64(d), B64(e), B64(g), B64(h), B64(j) to B64(m), B64(n)(ii), B64 (o)(ii), B64(p), B64(q)(ii), B66 and B67of
IFRS 3 Business Combinations, equivalent disclosures have been included in the consolidated financial statements of the Group;
(b) the requirements of IFRS 7 Financial Instruments: Disclosures;
(c) the requirements of paragraphs 91-99 of IFRS 13 Fair Value Measurement;
(d) the requirement in paragraph 38 of IAS 1 ‘Presentation of Financial Statements’ to present comparative information in respect of:
(i) paragraph 79(a)(iv) of IAS 1;
(ii) paragraph 73(e) of IAS 16 Property, Plant and Equipment;
(iii) paragraph 118(e) of IAS 38 Intangible Assets;
(iv) paragraphs 76 and 79(d) of IAS 40 Investment Property; and
(v) paragraph 50 of IAS 41 Agriculture.
(e) the requirements of paragraphs 10(d), 10(f), 39(c) and 134-136 of IAS 1 Presentation of Financial Statements;
(f) the requirements of IAS 7 Statement of Cash Flows;
(g) the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors;
(h) the requirements of paragraph 17 of IAS 24 Related Party Disclosures;
(i) the requirements in IAS 24 Related Party Disclosures to disclose related party transactions entered into between two or more members of a
group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member; and
(j) the requirements of paragraphs 134(d)-134(f) and 135(c)-135(e) of IAS 36 Impairment of Assets.
88
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the company financial statements (continued)
s.
Transition to FRS 101 (continued)
Reconciliation of Equity as at 1 April 2014
Fixed assets
Goodwill
Distribution rights
Other intangible assets
Tangible fixed assets
Investments
Trade and other receivables
Notes
UK GAAP
FRS 101
Re-classifications
Re-measurements
FRS 101
£m
£m
£m
1
13.8
164.2
26.7
121.6
7.8
334.1
2
3
Current assets
Programme rights and other stocks
Trade and other receivables
Cash at bank and in hand
Trade and other payables
(432.2)
(0.8)
(433.0)
(30.4)
(0.8)
(31.2)
303.7
3.1
Net current liabilities
Total assets less current liabilities
Trade and other payables
Provisions for liabilities
(101.5)
(7.7)
Net assets
Capital and reserves
Called up share capital
Hedging Reserve
Available-for-sale reserve
Retained Earnings
Fixed assets
Goodwill
Distribution rights
Other intangible assets
Tangible fixed assets
Investments
Trade and other receivables
Notes
1
2
3
Current assets
Programme rights and other stocks
Trade and other receivables
Cash at bank and in hand
Trade and other payables
4
Net current liabilities
Total assets less current liabilities
197.6
194.3
5.6
3.9
(6.4)
0.2
5.6
3.9
187.9
194.5
3.1
197.6
UK GAAP
FRS 101
Re-classifications
Re-measurements
FRS 101
£m
£m
£m
12.2
195.2
47.2
125.1
8.9
388.6
1.6
23.4
(23.4)
3.9
5.5
13.8
195.2
23.4
23.8
129.0
8.9
394.1
43.7
372.5
163.0
579.2
-
43.7
372.5
163.0
579.2
(655.5)
(0.7)
(656.2)
(76.3)
(0.7)
(77.0)
312.3
Trade and other payables
Provisions for liabilities
(141.7)
(6.3)
Net assets
Capital and reserves
Called up share capital
Hedging Reserve
Available-for-sale reserve
Retained Earnings
3.1
0.2
-
5
3
5
3
Shareholder's funds
89
306.8
(101.5)
(7.7)
194.5
Shareholder's funds
Reconciliation of Equity as at 31 March 2015
-
32.3
316.0
53.5
401.8
11.4
(11.4)
3.9
32.3
316.0
53.5
401.8
4
3.9
13.8
164.2
11.4
15.3
125.5
7.8
338.0
4.8
-
317.1
(141.7)
(6.3)
164.3
4.8
169.1
0.2
164.1
(3.0)
3.9
3.9
0.2
(3.0)
3.9
168.0
164.3
4.8
169.1
Annual Report and Financial Statements
Year ended 31 March 2016
BBC Worldwide Limited
Notes to the company financial statements (continued)
s.
Transition to FRS 101 (continued)
1. Goodwill
On transition to FRS 101, £1.6m amortisation on Goodwill has been reversed in the 14/15 financial year. Goodwill has been assessed for
impairment in accordance with IAS 28.
Goodwill arising on the acquisition of business trade and assets, representing any excess of the fair value of the considerations given over the fair
value of the identifiable assets and liabilities acquired, is capitalised and reviewed annually for impairment. The Company reversed previous
amortisation on Goodwill incurred since 1 April 2014, and adopted this accounting practice for the periods 1 April 2014 onwards. The change in
basis is to comply with FRS 101. The Company has invoked the 'true and fair override' of paragraph 10(2) of Schedule 1 to the Regulations to
overcome the conflict which the 'non amortisation' of Goodwill has with paragraph 22 of Schedule 1 of the Regulations. The effect of this change
has meant a reversal of £1.6m amortisation in the prior year.
2. Other Intangible assets
Under IAS 38, software, unless integral to hardware, is recognised as an intangible asset. Company software previously recognised under tangible
assets has been transferred to 'Other intangible assets' on the balance sheet, resulting in a £23.4m decrease in tangible assets at 31 March 2015
(£11.4m at 1 April 2014).
3. Investment Revaluation
Under previous UK GAAP, the Company recognised it's 12.2% investment in Left Bank Pictures Limited at cost of £0.5m, this has been remeasured
at fair value per IFRS 39 and resulted in a £3.9m restrospective adjustment to the balance of the investment at 1 April 2014.
4. Employee Benefits
On transition to FRS 101, a holiday pay accrual has been accounted for of £0.7m at 31 March 2015 (£0.8m at 1 April 2014).
5. Hedging Reserve
On transition to FRS 101, under IAS 39, the fair value movements from forward contracts designated as hedges has been accounted for under
'Hedging Reserve'. This has meant a £3.0m charge to the Hedging Reserves at 31 March 2015 (£5.6m credit at 1 April 2014).
6. Other remeasurements
The effect of the other remeasurement differences on reported profit of the Company for the year ended 31 March 2015 is as follows:
2015
£m
Profit for the year ended 31 March 2015 under UK GAAP
81.1
Goodwill (note 1)
Holiday pay accrual (note 2)
Hedge Reserves (note 3)
Increase in reported profit for the year
1.6
0.0
8.7
10.3
Profit for the year ended 31 March 2015 under FRS 101
91.4
Items that can be reclassified to profit or loss:
Hedging Reserves
Recognition and transfer of cash flow hedges
Tax on cash flow hedges taken directly to other comprehensive income
Other comprehensive (loss) for the year
Total comprehensive income for the year ended 31 March 2015 under FRS 101
90
(10.8)
2.2
(8.6)
82.8